The Cost Inflation Index (CII) for the Financial Year 2015-16 (applicable for the Assessment Year 2016-17) has been announced by CBDT (Central Board of Direct Taxes) at 1081. This Cost Inflation is required to calculate Long Term Capital Gain under Income Tax Act.
For the Finacial Year 2014-15, CII was 1024 which was an absolute hike of 9.05% than Financial Year 2013-14 CII 939. And this year it seems to be a mere hike of 5.57% only. From the point of view of tax planning, it may not work in favour of investors who take advantages of indexation benefit to reduce tax on LTCG.
SECTION 48, EXPLANATION (v) OF THE INCOME-TAX ACT, 1961 – CAPITAL GAINS – COMPUTATION OF – NOTIFIED COST INFLATION INDEX FOR FINANCIAL YEAR 2015-16
In exercise of the powers conferred by clause (v) of the Explanation to section 48 of the Income-tax Act, 1961 (42 of 1961), the Central Government hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), Central Board of Direct Taxes published in the Gazette of India, Extraordinary, vide number S.O. 709(E), dated the 20th August, 1998, namely;
In the said notification, in the Table, after serial number 34 and the entries relating thereto, the following serial number and entries shall be inserted, namely;