File ITR Yourself Anytime & Anywhere eFile now eFile now

Indexed cost of aquisition or improvement

Indexed cost of acquisition or improvement plays an important role while calculating Capital gain Tax on long term capital assets. For the purpose of hassle-free calculation of the indexed cost of acquisition using the Tax2Win calculator -Indexed cost of acquisition or improvement.

What is the Indexed Cost of acquisition or improvement?

Indexed cost can simply mean inflated cost. Indexed cost of acquisition means the cost of acquisition is to be increased by the inflation index factors known as cost inflation index numbers.

What is the Indexed Cost of acquisition or improvement calculator?

Indexed cost of acquisition or improvement calculator is a handy tool to calculate the increased cost of acquisition for the calculation of long term capital gain tax. Indexed cost of acquisition or improvement plays an important role while calculating Capital gain Tax on long term capital assets.

How to Calculate Indexed Cost of Acquisition or improvement?

To calculate the indexed cost of acquisition one needs the year of acquisition and the actual cost of acquisition, this can be calculated as follows: -

Indexed cost of acquisition
= Cost of acquisition X (CII of the year of transfer / CII of year of acquisition)

Indexed cost of improvement
= Cost of improvement X (CII of the year of transfer / ClI of the year of improvement)

*CII means cost inflation index

Benefits of Using Indexed Cost of Acquisition or Improvement Calculator

The calculation provided by the calculator can leave assessees with a surplus after-tax payments on long-term profits, which they can then invest in other financial assets with criteria for Using Indexed Cost of acquisition or Improvement Calculator.

Criteria for Using Indexed Cost of Acquisition or Improvement Calculator

INDEX COST OF ACQUISITION is a benefit which is provided to the assessee on gains on long term capital assets . By indexing the cost, inflation adjustment is done by which cost is increased which results in lower capital gain tax . To avail this reduction in taxes, the capital assets on which the capital gains are taxed should be held for more than 36months with the assessee , however in certain cases this period of holding is different from 36months like in case of unlisted equity shares or land and building it is 24 months while in case of Listed equity shares it is 12 months only. So those individuals who fulfil these criteria can use this calculator.

FAQ

1

What are the various cost inflation indexes in force?

The cost inflation index is as follows: -
*If the asset is acquired before 01/04/2001, the assessee has an option to take the cost of acquisition either as fair market value as on April 1, 2001, or its actual cost.
Cost Inflation Index numbers from 2001-02:

Sl. No. Financial Year Cost Inflation Index
1 2001-02 100
2 2002-03 105
3 2003-04 109
4 2004-05 113
5 2005-06 117
6 2006-07 122
7 2007-08 129
8 2008-09 137
9 2009-10 148
10 2010-11 167
11 2011-12 184
12 2012-13 200
13 2013-14 220
14 2014-15 240
15 2015-16 254
16 2016-17 264
17 2017-18 272
18 2018-19 280
19 2019-20 289
20 2020-21 301
21 2021-22 317
2

Example of calculation of Indexed Cost of acquisition?

Let’s take an example Mr A purchased a capital asset on 15.4.2015 for Rs. 15 lakh and sold the same 15.9.2021 for 22lakh. Now, let’s Calculate the indexed cost of capital asset-
Indexed cost of acquisition = Cost of acquisition
X (CII of the year of transfer / CII of year of acquisition)
= 15,00,000 X 317 / 254
= 18,72,047.24/-

3

What is the benefit of the Indexed Cost of acquisition?

When a Capital asset qualifies as a long term capital asset on the basis of its period of holding then a benefit of indexed cost of acquisition will be provided while calculating capital gain. This indexed cost helps in increasing the cost deductible from the sale consideration which in turn reduces the capital gain and results in lower capital gain tax

More Calculators

  • Income Tax Calculator

    Estimating your taxes before you file your tax return is an essential part of tax planning.

  • ITR Eligibility Calculator

    ITR that stands for Income Tax Return is a form that an assessee is supposed to submit to the Income Tax Department of India.

  • TDS Calculator

    Tax2win has done in-depth research on various aspects of TDS so you can save taxes and plan your finances very well.

  • HRA Calculator

    This free HRA calculator is updated for the year 2017 and 2018. You can now claim upto Rs. 60,000 deduction under Section 80GG even if you do not receive HRA.

  • Rent Reciept Calculator

    Avoid the last minute hassle of arranging your rent receipts for claiming HRA exemption. Use our free rent receipt generator and save taxes.

  • Old Slab vs New Slab Calculator

    Have you also been stuck between the choice of a more beneficial tax regime?? Relax!! We have made it easier for you.

  • Leave Encashment & Taxable Leave Salary Calculator

    Leave encashment is a component of salary that is received on conversion of unavailed leaves into cash.

  • Tax Saving Calculator - Calculate Deductions under 80C

    Lower your tax liability through tax exemptions. Section 80C allows you to be eligible for tax deduction upto Rs.1.5 lakh per year.

  • Income From House Property Calculator

    All types of properties are taxed under the head 'income from house property' in the income tax return.

What We Do

Get A personal eCA

Get your personal eCA to do tax filing for you. And it is personal, convenient & fast with maximum refund calculated for you.

Book Now

File it yourself

You can file your ITR on your own. It's Easy, quick & free when you file with Tax2win on your own.

File ITR Now

File Revised Return

Made mistake while filing ITR? We can help you correct it.

Revise ITR Now

Plan Tax & File ITR

A little planning can go a long way in saving your hard earned money. Don't just file your tax return, plan them & get maximum refunds.

Start Now

NRI Taxes & ITR Filing

Status of NRI seems to be cool but it brings with itself a lot of taxation..

Start Now
X

Important!!!

File Income Tax Return for 3 years

File Income Tax Return for 3 years

Contact now