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.

Budget 2011- Tax Provisions At a Glance

Here are the changes/provisions in brief relating to taxes on individuals and businesses proposed in the Union Budget 2011 by Finance Minister Pranab Mukherjee, who presented his sixth General Budget.

Individuals:
Tax exemption limit raised from Rs 1,60,000 to Rs 1,80,000
No new tax exemption limits for women (retained at Rs 1,90,000)
Age for being classified as senior citizen cut to 60 years from 65 years
For senior citizens, tax exemption limit increased to Rs 2,50,000.
New category of very senior citizens for those above 80 years introduced, tax exemption limit Rs 5 lakh
Tax sops of Rs 20,000 on Infra Bonds extended for one year

Small Businesses:
To simplify tax form for small businesses

Companies:
Surcharge of 7.5 % for domestic companies reduced to 5 %
MAT raised to 18.5% of book profits from 18%
Special Economic Zones to come under MAT
Foreign unit dividend tax rate cut to 15 % for Indian companies

Indirect Taxes:
Service tax retained at 10%
Central excise duty rate unchanged at 10%
Base rate on excise duty raised to 5% from 4%