June 24, 2011

Cost Inflation Index for Financial Year 2011-12

The Government of India has notified the Cost Inflation Index (CII) for the financial year 2011-12 to be 785.The index for the last year was 711.
This concept was started from Financial Year 1981-82 whose index is kept as 100 (base year). From then the Govt. has been continuously notifying the CII for each year based on the level of inflation. This is mainly used for income tax purposes for calculating the value of long term capital gains. The gain/loss on sale of asset is calculated by subtracting from the sale value, the
indexed cost of the asset, which is calculated as:
Original Cost of the Asset x Current year CII /CII in the year of purchase

However this index also shows the impact of rising prices. From 2008-09 when the index was 582, it has risen more than 200 points to 785 in 2011-12. The margin is just steeping up every time.

No comments:

Post a Comment

We will be happy to have your comments on the article.