The Income Tax Department on Wednesday notified the cost inflation index for the current fiscal to calculate long-term capital gains arising from the sale of immovable property, securities and jewellery, as per PTI report.

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The cost inflation index for the current fiscal year has been published by the Income Tax Department for use in calculating long-term capital gains from the sale of immovable property, securities, and jewellery, said PTI.

A taxpayer uses the cost inflation index (CII) to calculate gains from the sale of capital assets after adjusting for inflation.

According to PTI, the Cost Inflation Index for FY 2022-23 relevant to AY 2023-24 is 331.

The CII, according to AMRG & Associates Senior Partner Rajat Mohan, will assist taxpayers in calculating long-term capital gains tax and remitting advance tax on time.

"For the last couple of years, the inflation index has been rising faster, which depicts the mounting inflation in the country," Mohan added.

According to AKM Global Head of Tax Markets Yeeshu Sehgal, the CII will benefit taxpayers because long-term assets will be recognised at purchase cost despite rising inflation, PTI said.

"It is very important to adjust the said purchase cost with the new cost inflation index notified as 331 due to which the capital gains tax can be reasonably and fairly calculated," Sehgal said.

Every year, Cost Inflation Index, is notified under the Income-tax Act, 1961. It is popularly used to calculate the "indexed cost of acquisition" while calculating capital gains at the time of sale of any capital asset, said PTI.

To qualify for long-term capital gains, an asset must be held for longer than 36 months (24 months for immovable property and unlisted shares, 12 months for listed securities).

Since the prices of goods increase over time resulting in a fall in the purchasing power, the CII is used to calculate taxable long-term capital gains by calculating the inflation-adjusted purchasing price of assets, PTI said.