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How to Calculate the Cost Inflation Index (CII)?

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Ishita Ramani Ishita Ramani
Answered on April 06,2022

The discrepancy in the numbers is significant because it will be used to calculate inflation-adjusted asset purchases and, as a result, long-term capital gains.

For example, suppose you bought a house for 50 lakh in FY 2002-03 and wish to sell it today, in FY 2021-22. Now, the CII was 105 in 2002-03, and when you want to sell the property in FY 2021-22, the CII will be 317, so the Index cost will be (317/105) x 50 = 15,095,200. As a result, the long-term capital gain would be INR 10,095,200 which is equal to the Index cost less the actual price (purchase price).

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