Cost Inflation Index (CII): Table, Formula and How Indexation Works#
The Cost Inflation Index is a number notified annually by the CBDT that's used to adjust the purchase cost of a capital asset for inflation before computing long-term capital gains. Without this adjustment, a large part of what looks like "gain" on a long-held asset would actually just be inflation, taxed as if it were real profit. Indexation corrects for that — but a significant rule change from July 2024 has narrowed which assets it still applies to, which is the part most searches on this topic miss.
Current CII Values#
| Financial Year | CII Value |
|---|---|
| FY 2025-26 | 376 |
| FY 2026-27 | 384 |
The base year for the index is FY 2001-02, set at 100. Every later year's CII is notified relative to that base, so an asset's indexed cost grows roughly in line with inflation between the year of purchase and the year of sale.
The Indexation Formula#
Indexed Cost of Acquisition = Original Cost of Acquisition × (CII of year of sale / CII of year of purchase)
If the asset underwent improvement that also qualifies for indexation, the same formula applies separately to the cost of improvement, using the CII of the year the improvement cost was incurred.
Worked Example#
Suppose a property was purchased in FY 2010-11 for ₹40,00,000 (CII for FY 2010-11 was 167) and sold in FY 2025-26 (CII 376):
Indexed Cost = 40,00,000 × (376 / 167) = ₹90,05,988 (approx.)
If the property sold for ₹1,50,00,000, the long-term capital gain works out to roughly ₹1,50,00,000 − ₹90,05,988 = ₹59,94,012, rather than the ₹1,10,00,000 gain you'd get without indexation — a substantial difference in taxable gain.
Which Assets Still Qualify for Indexation#
This is the part that changed materially and trips up most people searching for a general CII table:
- Immovable property (land and buildings) acquired before 23 July 2024 — the seller can choose between two computation methods for long-term capital gains: 20% tax with indexation, or 12.5% tax without indexation — whichever produces the lower tax liability. This transitional option exists specifically because the removal of indexation would otherwise have increased tax for many long-held properties.
- Property acquired on or after 23 July 2024 — taxed at 12.5% without indexation. The choice-of-method option above doesn't apply here.
- Most other capital assets (listed securities, unlisted shares, gold, debt mutual funds, and similar) — indexation has been removed for long-term capital gains computation on these categories; they're taxed on the actual (non-indexed) gain at the applicable rate.
In short: if you're computing capital gains on anything other than pre-23-July-2024 immovable property, check the current rate and computation method for that specific asset class before assuming indexation applies — the CII table above is still published and used, but its applicability has narrowed considerably.
How to Determine "Year of Purchase" for CII#
- For a property inherited or received as a gift, the CII of the previous owner's year of acquisition is used, not the year you received it — the holding period and cost basis carry over from the original owner.
- For a self-constructed property, the CII applicable is based on the year construction was completed (or the relevant cost was incurred), not the year the land was purchased, if construction happened later.
Common Mistakes#
- Applying indexation to assets purchased after 23 July 2024 — these are taxed on the actual gain at 12.5%, with no indexation benefit available regardless of the asset type.
- Applying indexation to non-property assets (shares, gold, debt funds) purchased before the cutoff and assuming the same transitional choice-of-method applies — it generally doesn't; the dual-rate option is specific to immovable property.
- Using the wrong year's CII — the "year of purchase" for indexation purposes follows specific carry-over rules for inherited or gifted assets, not simply the calendar year you took possession.
- Forgetting to index the cost of improvement separately, using the CII of the year each improvement cost was actually incurred, not the original purchase year.
Frequently Asked Questions#
Does the CII table still matter if indexation has been removed for most assets? Yes — it remains directly relevant for immovable property acquired before 23 July 2024, since sellers of such property need it to compare the indexed (20%) and non-indexed (12.5%) computation and choose whichever results in lower tax.
Is the choice between 20% (with indexation) and 12.5% (without) available every year, or is it a one-time election? This choice applies specifically to the sale of immovable property acquired before the 23 July 2024 cutoff — confirm the current computation and reporting mechanics for your specific transaction with your CA, since the practical application (per-transaction vs. per-asset) matters for correct filing.
What CII value should I use if I purchased in one financial year but the sale spans into the next? Use the CII of the financial year in which the sale (transfer) actually takes place as the numerator, and the CII of the year of purchase (or deemed purchase, for inherited assets) as the denominator.
Key Takeaways#
- CII for FY 2025-26 is 376; for FY 2026-27 it's 384, base year FY 2001-02 = 100.
- Indexation now applies meaningfully only to immovable property acquired before 23 July 2024, which gets a choice between 20% (with indexation) and 12.5% (without).
- Property bought on or after 23 July 2024, and most other capital assets, are taxed at 12.5% without indexation.
- Always confirm which computation method applies to your specific asset and acquisition date before using the CII table — applying it to the wrong asset class overstates or understates your actual tax liability.