# Capital Gains with Indexation

> Indexation inflates your purchase cost by the Cost Inflation Index (CII) so you're taxed only on the real gain. After the July 2024 change, it is available only to resident individuals and HUFs selling land or buildings bought before 23 July 2024, who can pay the lower of 20% with indexation and 12.5% without.

Interactive calculator: https://www.industax.com/calculators/capital-gains-indexation

- **CII FY 2025-26:** 376
- **CII FY 2024-25:** 363
- **Base year:** 2001-02 = 100

## 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

1. Purchase cost ₹30,00,000 in FY 2010-11 (CII 167); sale price ₹1,00,00,000 in FY 2025-26 (CII 376).
2. Indexed cost = ₹30,00,000 × 376 ÷ 167 = ₹67,54,491. Indexed gain = ₹32,45,509; tax at 20% = ₹6,49,102.
3. Without indexation: gain = ₹70,00,000; tax at 12.5% = ₹8,75,000.

**Result:** Choosing indexation saves about ₹2.26 lakh (before cess).

## FAQs

### Is indexation available on mutual funds or gold now?

No. From 23 July 2024 indexation was removed for all assets except the grandfathered option for resident individuals and HUFs on land and buildings acquired before that date.

### What CII applies to FY 2026-27?

The index for each year is notified by the CBDT. Use the notified figure for the year of sale; this calculator lets you enter any index value.

### Can I use indexation on the cost of improvement too?

Yes. Each improvement is indexed using the CII of the year it was incurred. Improvements before 1 April 2001 are ignored.

## Official sources

- incometaxindia.gov.in: https://www.incometaxindia.gov.in/

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Canonical page: https://www.industax.com/calculators/capital-gains-indexation
Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.