A very informative article on Cost Inflation index.This should clear many doubts which keep getting raised in the forum: Extracts:
CII The Implication
In case of long term capital gains an investor can reduce his tax payment by using the indexation benefit. The rules are a bit different for real estate and securities:
1) For investments in Property: The Long Term Capital Gain (LTCG) is calculated when property is sold after 3 years otherwise it is a Short Term Capital Gain.
Tax payment= 20% of gains after taking indexed purchase cost
(It is mandatory to take the indexed cost as purchase price)
2) For investments in Securities: The Long Term Capital Gain (LTCG) is calculated when investments is sold after 1 years otherwise it is a Short Term Capital Gain.
Without Indexation Tax Payment = 10% of Gain
With Indexation Tax payment= 20% of gains after taking indexed purchase cost
- See more at: Cost Inflation Index (CII) How it impacts Capital Gain Tax on Real Estate & Mutual Funds
CII The Implication
In case of long term capital gains an investor can reduce his tax payment by using the indexation benefit. The rules are a bit different for real estate and securities:
1) For investments in Property: The Long Term Capital Gain (LTCG) is calculated when property is sold after 3 years otherwise it is a Short Term Capital Gain.
Tax payment= 20% of gains after taking indexed purchase cost
(It is mandatory to take the indexed cost as purchase price)
2) For investments in Securities: The Long Term Capital Gain (LTCG) is calculated when investments is sold after 1 years otherwise it is a Short Term Capital Gain.
Without Indexation Tax Payment = 10% of Gain
With Indexation Tax payment= 20% of gains after taking indexed purchase cost
- See more at: Cost Inflation Index (CII) How it impacts Capital Gain Tax on Real Estate & Mutual Funds