Monday, 1 October 2012

Cost Inflation Index (CCI) 2012-13 at 852



Capital Gain : Capital gain in case of immovable properties arise when net sale consideration of the property is more than the acquisition cost. 
Capital Gain = Net Sale Consideration - Acquisition Cost


Cost Inflation Index: To factor the impact of inflation, Section 48 of the Income Tax Act 1961 provides for considering the "Indexed Cost of Acquisition” instead of actual cost of acquisition. This index, Cost Inflation Index (CII) is notified by the Central Government every year. The Central Government has notified the value of Cost Inflation Index for 2012-13 as 852. http://www.incometaxindia.gov.in/archive/BreakingNews_CostInflation_20092012.pdf 

Indexed Cost of Acquisition: As per the Section 48 of the Income Tax Act “indexed cost of acquisition” means an amount which bears to the  cost of acquisition the same proportion as Cost Inflation Index for  the year in which the asset is transferred bears to the Cost Inflation Index for the first year in which the asset was held by the assessee or for the year beginning on the 1st day of April, 1981, whichever is later; 
                             Index for year of sale          
Indexed Cost =    ________________________  x      Actual cost
                          Index for year of acquisition 

Long Term Capital Gains = Net Sale Consideration - Indexed Cost
Presently the Long Term Capital Gains are taxed at 20 percent.

Illustration
Index for year 2001-2002 : 426Index for year 2012-2013 : 852
Acquisition Cost in 2001-2002 : 50 Lakhs
Indexed Cost = (852/426) * 50 = 2 * 50 Lakhs = 1 crore
So upto 1 crore no Long Term Capital Gain would arise.
Suppose Sale Consideration is 1.25 Crores, so only 1.25-1.00 = 25 Lakhs would be treated as Long Term Capital Gain which could attract a tax of 25 * 20% = Rs. 5 Lakhs 

Cost Inflation Index (CII) as notified by Central Government :
FINANCIAL YEAR CII
1981-1982 100
1982-1983 109
1983-1984 116
1984-1985 125
1985-1986 133
1986-1987 140
1987-1988 150
1988-1989 161
1989-1990 172
1990-1991 182
1991-1992 199
1992-1993 223
1993-1994 244
1994-1995 259
1995-1996 281
1996-1997 305
1997-1998 331
1998-1999 351
1999-2000 389
2000-2001 406
2001-2002 426
2002-2003 447
2003-2004 463
2004-2005 480
2005-2006 497
2006-2007 519
2007-2008 551
2008-2009 582
2009-2010 632
2010-2011 711
2011-2012 785
2012-2013 852

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