CBDT Notifies Cost Inflation Index for FY25 At 363: What Is This?

The income tax department has notified the cost inflation index for the current fiscal beginning April 2024 for calculating long-term capital gains arising from the sale of immovable property, securities and jewellery.

The cost inflation index (CII) is used by taxpayer to compute gains arising out of sale of capital assets after adjusting inflation. The Central Board of Direct Taxes (CBDT) on May 25 notified the cost inflation index for the current financial year (2024-25).

“The Cost Inflation Index for FY 2024-25 relevant to AY 2025-26 & subsequent years is 363,” according to the notification of the Central Board of Direct Taxes notifying the latest CII number.

What is the Cost Inflation Index?

Suppose you bought a house 10 years ago. Today, you might be able to sell it for a much higher price. But, has the house itself really become that much more valuable? Not necessarily. Inflation, the general rise in prices over time, means your money buys less each year.

The Cost Inflation Index (CII) is a tool that helps account for this. It’s a number published by the government that reflects the estimated yearly increase in prices. This index is particularly useful when calculating capital gains taxes on things like property or stocks. By factoring in inflation, the CII helps adjust the original purchase price of an asset to better reflect its real value today. This can result in a lower capital gain and potentially lower taxes you have to pay.