Cost Inflation Index for FY 2026-27: Full Table, Meaning, and Calculation

The Cost Inflation Index (CII) for FY 2026-27 is 384, notified by the CBDT via Notification No. 85/2026-Income Tax dated July 15, 2026, applicable to the tax year 2026-27 from April 1, 2026 onward.

The CII for FY 2025-26 is 376, up from 363 in FY 2024-25.

Cost Inflation Index is a government-notified figure used to adjust the purchase price of a long-term capital asset for inflation before calculating capital gains, so tax is levied only on real profit rather than the portion of the gain caused purely by rising prices.

CII is defined as 75% of the average rise in the Consumer Price Index (urban) for the immediately preceding financial year. In practice, the exact figure is fixed and notified each year by the Central Board of Direct Taxes rather than computed independently by taxpayers.

Indexed cost of acquisition equals the original cost multiplied by the CII of the year of sale, divided by the CII of the year of purchase.

The base year is 2001-02, with a CII value of 100. For any asset purchased before April 1, 2001, a taxpayer can use the higher of the actual cost or the Fair Market Value as on April 1, 2001, as the cost of acquisition before applying indexation.

The original base year was 1981-82, but taxpayers and tax authorities both struggled to reliably value properties acquired before April 1981, since supporting records and comparable valuations from that era were hard to obtain. The government shifted the base year to 2001 to make Fair Market Value determination faster and more reliable.

Only in a narrow set of cases. For land or building acquired before July 23, 2024, a resident individual or HUF can still choose between 20% tax with indexation or 12.5% without it, whichever is lower. Property acquired on or after July 23, 2024, along with gold, unlisted shares, and other assets, is taxed at a flat 12.5% with no indexation option at all.

No. Debt mutual fund units purchased on or after April 1, 2023 are treated as short-term capital gains regardless of holding period, taxed at the investor's income tax slab rate, with no indexation benefit and no long-term category available.

No. Long-term capital gains on listed equity shares and equity-oriented mutual fund units are computed under Section 112A without any indexation benefit, taxed at a flat rate above the exemption threshold. Indexation under the Cost Inflation Index applies to Section 112 assets such as unlisted shares, not to listed equity covered by Section 112A.

Only under specific conditions since Budget 2026. Effective April 1, 2026, the capital gains exemption on SGB redemption by the RBI applies only if the investor subscribed at the original issue and holds the bond continuously until maturity. An investor who bought the bond on the secondary market, or who redeems it prematurely rather than holding to maturity, no longer qualifies for the exemption and must pay capital gains tax on the redemption gain.

For property received through a will or inheritance, use the Cost Inflation Index for the year the previous owner originally purchased the property, not the year you inherited it. The cost of acquisition also carries over from the previous owner's original purchase price, or the Fair Market Value as on April 1, 2001 if purchased before that date.

The Central Board of Direct Taxes (CBDT) notifies the Cost Inflation Index for each financial year through an official notification published in the Gazette of India, typically issued a few months into the financial year it applies to.

Yes. Any cost of improvement incurred before April 1, 2001 is ignored entirely when computing capital gains; only improvement costs incurred on or after that date are eligible for indexation.

Generally no, with two exceptions: capital indexation bonds and Sovereign Gold Bonds issued by the RBI. Ordinary corporate bonds and debentures do not get indexation benefit on capital gains.

The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over time and is published monthly by the National Statistical Office. The Cost Inflation Index is a separate, once-a-year figure the CBDT derives with reference to CPI movement specifically for capital gains indexation; the two numbers are related in concept but serve entirely different purposes and are not interchangeable.

It depends entirely on how much your asset's CII-adjusted cost has risen relative to its sale price. On assets where the price has risen only modestly above inflation, the 20%-with-indexation option usually produces less tax than the 12.5%-flat option; on assets that have appreciated sharply well beyond inflation, the flat 12.5% rate without indexation often works out cheaper despite the higher nominal rate.

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