How indexed cost is calculated
Indexed cost = purchase cost × (CII of the year of sale ÷ CII of the year of purchase). For assets bought before 1 April 2001, use the fair market value on 1 April 2001 (capped at the stamp-duty value on that date) and the 2001-02 index of 100.
Cost Inflation Index — selected years
| Financial year | CII |
|---|---|
| 2001-02 | 100 |
| 2005-06 | 117 |
| 2010-11 | 167 |
| 2015-16 | 254 |
| 2017-18 | 272 |
| 2019-20 | 289 |
| 2020-21 | 301 |
| 2021-22 | 317 |
| 2022-23 | 331 |
| 2023-24 | 348 |
| 2024-25 | 363 |
| 2025-26 | 376 |
When indexation helps
- Property held for many years where inflation explains most of the gain
- Properties bought before 2001 with a reasonable 2001 fair market value
- Not helpful for recent purchases — 12.5% without indexation often wins
- Not available to NRIs — they pay 12.5% without indexation
Worked example: flat bought in FY 2010-11, sold in FY 2025-26
- 1Purchase cost ₹30,00,000 in FY 2010-11 (CII 167); sale price ₹1,00,00,000 in FY 2025-26 (CII 376).
- 2Indexed cost = ₹30,00,000 × 376 ÷ 167 = ₹67,54,491. Indexed gain = ₹32,45,509; tax at 20% = ₹6,49,102.
- 3Without indexation: gain = ₹70,00,000; tax at 12.5% = ₹8,75,000.
Choosing indexation saves about ₹2.26 lakh (before cess).
