ET OnlineThe rules for calculating long-term capital gains (LTCG) have changed, but the Cost Inflation Index (CII) is still required in certain scenarios to determine the income tax liability. The Income Tax Department has notified the CII for the current financial year 2025-26 (assessment year 2026-27). The notification was issued on July 1, 2025.
The Cost Inflation Index (CII) for the financial year 2025-26 has been notified as "376". This figure ("376") will be used to compute the indexed cost of acquisition for assets sold in FY 2025-26. This new index number will take effect on April 1, 2026.
Documents for ITR filing FY 2024-25 (AY 2025-26): Eight documents you need to file income tax return
Section 48 of Income Tax explains how to compute capital gains when you sell an asset. CII provides an indexation benefit in the event of the sale of certain capital assets. It helps adjust the purchase price of an asset using the Cost Inflation Index (CII) to account for inflation, thereby reducing the taxable profit (capital gains).
The indexation benefit is available only on the capital gains that are long-term in nature.
According to the current rules, if a house property is acquired on or before July 22, 2024, and sold on or after July 23, 2024, homeowners can choose between the old and new rules to reduce their tax liability.
Under the old rule, the tax will be calculated as 20% with indexation benefit. Under the new rule, the LTCG tax will be calculated as 12.5% without indexation benefit.
Hence, any homeowner selling a house in the current FY 2025-26, which was acquired on or before July 22, 2024, will need CII to calculate LTCG on the sale of the house with indexation benefit.
There is a formula to calculate the inflation-indexed purchase price using the CII number.
The formula is:
Inflation adjusted price = (CII of the year of sale / CII of the year of purchase) * Actual purchase price of the asset
Here is an example to understand this. Suppose an individual bought a house in FY 2002-03 for Rs 30 lakh. The inflation-adjusted price of that house in FY 2025-26 will be (376/105) X Rs 30 lakh = Rs 1,07,42,857.14.
If the house is sold between April 1, 2025 and March 31, 2026, then this inflation-adjusted price of Rs 1.07 crore will be subtracted from the sale price to arrive at the long-term capital gain or long-term capital loss.
What is the CII for the current FY 2025-26?
The Cost Inflation Index (CII) for the financial year 2025-26 has been notified as "376". This figure ("376") will be used to compute the indexed cost of acquisition for assets sold in FY 2025-26. This new index number will take effect on April 1, 2026.Documents for ITR filing FY 2024-25 (AY 2025-26): Eight documents you need to file income tax return
Where will CII be applied?
Section 48 of Income Tax explains how to compute capital gains when you sell an asset. CII provides an indexation benefit in the event of the sale of certain capital assets. It helps adjust the purchase price of an asset using the Cost Inflation Index (CII) to account for inflation, thereby reducing the taxable profit (capital gains).The indexation benefit is available only on the capital gains that are long-term in nature.
Cost Inflation Index (CII) for FY 2025-26
| Here are the CII numbers notified by the income tax department: | |
| Financial year | Cost Inflation Index |
| 2025-26 | 376 |
| 2024-25 | 363 |
| 2023-24 | 348 |
| 2022-23 | 331 |
| 2021-22 | 317 |
| 2020-21 | 301 |
| 2019-20 | 289 |
| 2018-19 | 280 |
| 2017-18 | 272 |
| 2016-17 | 264 |
| 2015-16 | 254 |
| 2014-15 | 240 |
| 2013-14 | 220 |
| 2012-13 | 200 |
| 2011-12 | 184 |
| 2010-11 | 167 |
| 2009-10 | 148 |
| 2008-09 | 137 |
| 2007-08 | 129 |
| 2006-07 | 122 |
| 2005-06 | 117 |
| 2004-05 | 113 |
| 2003-04 | 109 |
| 2002-03 | 105 |
| 2001-02 | 100 |
| Source: Income tax notifications | |
Which assets can you avail the indexation benefit for?
The capital gains rules were changed from July 23, 2024. The indexation benefit was removed from all capital assets, except in the case of house property, in certain instances.According to the current rules, if a house property is acquired on or before July 22, 2024, and sold on or after July 23, 2024, homeowners can choose between the old and new rules to reduce their tax liability.
Under the old rule, the tax will be calculated as 20% with indexation benefit. Under the new rule, the LTCG tax will be calculated as 12.5% without indexation benefit.
Hence, any homeowner selling a house in the current FY 2025-26, which was acquired on or before July 22, 2024, will need CII to calculate LTCG on the sale of the house with indexation benefit.
Formula to calculate the inflation-indexed purchase price
There is a formula to calculate the inflation-indexed purchase price using the CII number. The formula is:
Inflation adjusted price = (CII of the year of sale / CII of the year of purchase) * Actual purchase price of the asset
Here is an example to understand this. Suppose an individual bought a house in FY 2002-03 for Rs 30 lakh. The inflation-adjusted price of that house in FY 2025-26 will be (376/105) X Rs 30 lakh = Rs 1,07,42,857.14.
If the house is sold between April 1, 2025 and March 31, 2026, then this inflation-adjusted price of Rs 1.07 crore will be subtracted from the sale price to arrive at the long-term capital gain or long-term capital loss.
