Price Inflation Index FY 2021-22

The price of inflation index (CII) for the monetary yr 2021-22 has been notified by the Ministry of Finance. The ministry has set the Price Inflation Index FY 202-22 as 317. For the earlier FY 2020-21, CII worth was 301.

The speed of inflation for indexation functions is specified by the Indian Authorities for each monetary yr.

The bottom yr is taken into account as 2001-02.

The bottom yr was shifted from 1981 to 2001 in Price range 2017.

This CII quantity is vital as it’s used to reach on the inflation adjusted buying worth of belongings (listed price of acquisition) which have been offered or deliberate to be offered in FY 2021-22.

The listed price of acquisition is used within the calculation of Lengthy-term capital beneficial properties (LTCG) or Lengthy Time period Capital Losses (LTCL).

Kindly word that CII is used to calculate inflation-adjusted price just for these belongings the place inflation-adjusted (indexation profit) is allowed. For instance, within the instances of debt mutual funds, real-estate property, gold and so forth.,

The CII worth can’t be used to reach at LTCG/LTCL on fairness mutual funds.  Index profit is not allowed in case of bonds or debentures besides capital indexation bonds or sovereign gold bonds issued by the RBI.

Newest Price Inflation Index FY 2021-22 | CII Chart AY 2022-23

Beneath is the desk of Price Inflation Index numbers, as stipulated by the Earnings Tax Division. You possibly can take values from the desk to compute the listed or inflation-adjusted price of acquisition.  

How you can Calculate the Listed price of buy or listed price of Acquisition (ICoA)?

The listed price is calculated with the assistance of a desk of price inflation index as given above.

Divide the fee at which you bought the Property/Funding by the index as on the date of the acquisition. Multiply this by the index as on the date of sale.

ICoA = Authentic price of acquisition * (CII of the yr of sale/CII of yr of buy)

Let’s say you’ve invested in a debt fund in August 2014. Your funding quantity was Rs 2,00,000 (20,000 models @ Rs 10 every). Seven years later, you redeemed your investments in June 2021, at a worth of Rs 3,00,000 ( 20,000 models @ Rs 15 every).

Therefore, once you offered your investments, the worth of your investments was Rs 3,00,000. Your funding made capital beneficial properties price Rs 1,00,000. Nonetheless, you needn’t pay tax on this whole quantity of Rs 1,00,000.

All it’s essential to do is apply the method.

• Price of acquisition is Rs 2 lakh.
• CII quantity for buy yr (2014-15) was 240.
• CII throughout sale yr (FY 2021-22) is 317.

This may imply that your listed price worth of acquisition could be –> (2,00,000 * 317/240) = Rs 2,64,167.

As once more, your Long run capital beneficial properties would come right down to Rs. 35,833 (Rs 3,00,000- Rs.2,64,167), you’ll be taxed 20% of this quantity (as in comparison with Rs 1,00,000 with out indexation) which can once more, tremendously scale back your tax obligations.

Thus, with Indexation, you possibly can get pleasure from the advantages of your individual investments with out dropping an extreme quantity of taxes.

CII Index Worth for FY 2021-22 / AY 2022-23 | Notification

Beneath is the notification issued by the Ministry of Finance on Price Inflation Index for FY 2021-22.

Proceed studying:

1. What’s Damaging Actual Curiosity Fee? | How Can Curiosity Charges Be Damaging?
2. What’s Indexation of Mutual Funds and why is it vital for you?
3. Checklist of all Fashionable Funding Choices in India – Options & Snapshot
4. How you can save Capital Beneficial properties Tax on Sale of Land / Home Property?

(Submit first revealed on 27-June-2021)