Cost Inflation Index for FY 2022-23: Important Facts
The cost inflation index (CII) rate for FY 2022-23 has been announced by the Central Board of Direct Taxes (CBDT) on 14th June 2022. The rate for FY 2022-23 to Assessment Year 2023-24 stood at 331. In FY 2021-22 it was 317.
What do you mean by the CII?
CII is an index which is utilized to compute the rise of the asset’s value after it is adjusted for inflation. The CII number is utilized to compute the adjusted inflation cost of only those assets for which inflation adjustment is allowed. The CII number is also not used to compute long-term capital liabilities and gains for equity mutual funds as an amount more than Rs 1,00,000 in a fiscal year gets a tax deduction of 10 percent.
What is the usage of the Cost Inflation Index?
The CII is utilized to calculate the cost price which is inflation-adjusted for any asset. Using this adjusted price, capital gains or losses in the long term are calculated. CII is also used to calculate values that are inflation-adjusted for various assets that include buildings, land, gold jewellery, houses, etc. The CII number also helps to calculate the capital gains for the long term on which an individual has to pay taxes.
How is the CII number calculated?
The CII is calculated using the following formula which is:
- (The sale year CII/ The purchase year CII) * The actual cost price.
In the 2017 budget, the base year was changed by the government to 2001 from 1981.