What is the indexation rate for 2020-21?
301
The cost inflation index for FY 2020-21 is 301. Check for other financial year’s CII Value.
What is the indexation rate for FY 2021-22?
317
What is the current Cost Inflation Index
| Financial Year | Cost Inflation Index (CII) |
|---|---|
| 2018-19 | 280 |
| 2019-20 | 289 |
| 2020-21 | 301 |
| 2021-22 | 317 |
What is indexation in income tax?
Indexation is used to adjust the purchase price of an investment to reflect the effect of inflation on it. A higher purchase price means lesser profits, which effectively means a lower tax. With the help of indexation, you will be able to lower your long-term capital gains, which brings down your taxable income.
What is the cost inflation index for 2019-20?
289
NOTIFIED COST INFLATION INDEX UNDER SECTION 48, EXPLANATION (V)
| Sl. No. | Financial Year | Cost Inflation Index |
|---|---|---|
| 17 | 2017-18 | 272 |
| 18 | 2018-19 | 280 |
| 19 | 2019-20 | 289 |
| 20 | 2020-21 | 301 |
How is indexation calculated?
Formula for computing indexed cost is (Index for the year of sale/ Index in the year of acquisition) x cost. For example, if a property purchased in 1991-92 for Rs 20 lakh were to be sold in A.Y. 2009 -10 for Rs 80 lakh, indexed cost = (582/199) x 20 = Rs 58.49 lakh.
How is Ltcg calculated?
40,00,000. Cost Inflation Index = CII of FY2020-21/CII of FY2012-13 = 301/220 = 1.37 (approx.) LTCG = Selling price – Indexed cost of purchase = Rs. 40,00,000 – Rs….LTCG Tax Calculation Examples: How it is Done.
| Type of Capital Asset | Holding Period of the Asset | |
|---|---|---|
| Immovable properties | 2 years or more | Less than 2 years |
| Movable property | 3 years or more | Less than 3 years |
How is Ltcg tax calculated?
The long-term capital gains tax will be the difference between the selling price of the asset and the fair market value, which is Rs 50 (Rs 300 – Rs 250). Example 2: You have purchased an equity share on 01 February 2017 at Rs 200. The fair market value as of 31 January 2018 was Rs 150.
Is indexation allowed on shares?
The Long-term capital gains (LTCG) over Rs 1 lakh on listed equity shares per financial year is taxable at the rate of 10% without the benefit of indexation.
How do you benefit from indexation?
Indexation refers to recalculating the purchase price, after adjusting for inflation index, as published by the Income-Tax authorities. Since the purchase price is adjusted for inflation, the capital gain gets reduced. In case of LTCG for non-equity funds, investors can avail the indexation benefit.
How do you calculate tax on inflation?
To calculate the real rate of return after tax, divide 1 plus the after-tax return by 1 plus the inflation rate. Dividing by inflation reflects the fact a dollar in hand today is worth more than a dollar in hand tomorrow. In other words, future dollars have less purchasing power than today’s dollars.
What is cost inflation index in India?
Cost inflation index calculates the estimated rise in the cost of goods and assets year-by-year as a result of inflation. It is fixed by the central government in its official gazette to measure inflation. Section 48 of the Indian Income Tax Act, 1961, defines the index as notified by the government every year.
Is Ltcg tax free in India?
However, LTCG on equity-oriented funds is subject to taxation after the Union Budget 2018. The Long-term capital gains (LTCG) over Rs 1 lakh on listed equity shares per financial year is taxable at the rate of 10% without the benefit of indexation.