Cost Inflation Index (CII): Meaning, Table & Calculation

Introduction

The Cost Inflation Index (CII) is used to align the prices of goods, services, and assets with the prevailing inflation rate. It estimates the inflation-adjusted value of assets by reflecting the year-to-year rise in prices. Since inflation affects current asset prices, the Central Government releases the CII annually through an official gazette notification under Section 48 of the Income Tax Act, 1961. This index plays a crucial role in computing long-term capital gains, enabling taxpayers to use indexation to adjust the original purchase price of capital assets for inflation—ultimately lowering their taxable gains. In this article, you will learn about the Cost Inflation Index in detail, along with the complete CII chart.

What is the Cost Inflation Index (CII)?

The Cost Inflation Index (CII) is an essential tool used in India to adjust the cost of assets in line with inflation. Its primary purpose is to help compute long-term capital gains arising from the sale or transfer of capital assets such as land, property, shares, stocks, trademarks, patents, and more.

Since long-term assets remain recorded in financial statements at their original purchase cost, rising inflation can create a large gap between their book value and current market value. When such assets are sold, this difference may lead to high taxable capital gains. The CII helps mitigate this by inflation-adjusting the original cost of the asset, thereby reducing the taxable portion of capital gains.

Base Year and the Cost Inflation Index (CII)

The base year serves as the reference point for measuring inflation and carries an index value of 100. Taxpayers compare the CII of subsequent years with the base year to calculate inflation-adjusted costs.
For assets acquired before the base year, taxpayers may use the higher of the actual purchase price or the Fair Market Value (FMV) as of the first day of the base year. This value is then indexed to claim inflation benefits.
Earlier, the base year was 1981–82, but determining FMV for older assets proved difficult. To simplify valuations and reduce disputes, the government revised the base year to 2001–02. Therefore, for assets bought before April 1, 2001, taxpayers can consider the higher of the actual cost or the FMV as of April 1, 2001 for indexation.

Cost Inflation Index (CII) Table

Below is the Cost Inflation Index from FY 2001–02 to FY 2024–25:

S.No	Financial Year	Cost Inflation Index (CII)
1	2001-02	100
2	2002-03	105
3	2003-04	109
4	2004-05	113
5	2005-06	117
6	2006-07	122
7	2007-08	129
8	2008-09	137
9	2009-10	148
10	2010-11	167
11	2011-12	184
12	2012-13	200
13	2013-14	220
14	2014-15	240
15	2015-16	254
16	2016-17	264
17	2017-18	272
18	2018-19	280
19	2019-20	289
20	2020-21	301
21	2021-22	317
22	2022-23	331
23	2023-24	348
24	2024-25	363

Cost Inflation Index Formula

The Cost Inflation Index (CII) is used in India to adjust the purchase cost of assets for inflation, helping determine accurate taxable capital gains at the time of sale. The indexation formula is:

Indexed Cost of Acquisition = (CII of the Year of Sale / CII of the Year of Purchase) × Original Cost

Where:

CII of the Year of Sale: The index value notified by the Government of India for the year in which the asset is sold.
CII of the Year of Purchase: The index value for the year in which the asset was originally acquired.
Original Cost: The asset’s original purchase price.

Example:
Suppose you purchased a house in 2010 for ₹50 lakhs.

CII for 2010: 167
CII for 2024: 347

Indexed Cost = (347 ÷ 167) × ₹50,00,000 ≈ ₹1,03,89,221

How Indexation Benefits Long-Term Capital Assets

1. Indexation reduces the tax burden on long-term capital gains by increasing the purchase cost in line with inflation, thereby lowering the taxable gain. This is particularly useful for assets like real estate, debt mutual funds, and other long-term investments.
  If an asset is held for more than 24 months, the resulting profit is treated as long-term capital gains (LTCG) and is typically taxed at 20% with indexation. Since the indexed cost is higher than the original cost, the taxable gains reduce significantly, providing substantial tax relief. This tax advantage has historically made bond funds and Fixed Maturity Plans (FMPs) popular among investors.

Difference Between CII and CPI

1. The key difference between the Cost Inflation Index (CII) and the Consumer Price Index (CPI) lies in their focus:
  - CII measures inflation in the cost of capital assets.
  - CPI tracks price changes in goods and services consumed by households.

Budget 2024: Changes to Indexation Benefits

1. In Budget 2024, the Indian government removed indexation benefits for long-term capital gains (LTCG) from July 23, 2024 onward. This means investors can no longer adjust the purchase price of most assets for inflation when calculating capital gains, which may result in higher taxable gains.
  However:
  - For land or buildings purchased before July 23, 2024, taxpayers may choose between:
    - 12.5% tax rate without indexation, or
    - 20% tax rate with indexation
  - For land or buildings purchased on or after July 23, 2024, LTCG will be taxed at a flat 12.5%, with no indexation benefit.

About the Author

Vinod is an experienced legal writer who simplifies complex legal topics into clear, practical insights. His work helps entrepreneurs understand their legal obligations and build compliant, sustainable businesses with confidence.

January 9, 2026