What is the Cost Inflation Index for FY 2015-16 AY 2016-17

Cost Inflation Index (CII) is used to arrive at the adjusted cost of your capital gains after taking care of "official" inflation figures. CII for FY 2015-16 has just been declared...Read on..

CBDT has notified "1081" as the Cost Inflation Index (CII) for Financial Year 2015-16 / Assessment Year 2016-17. The Cost Inflation Index for the last year (Financial Year 2014-15) was "1024". This signifies an official annual inflation figure of 5.56% (down from the last years inflation of 8.30%).

Cost Inflation Index is required when you calculate Long term capital gain under Income Tax Act. It could be long term capital gains because of transactions in real estate, Fixed Maturity Plans, Debt Based Mutual Funds, Gold ETFs or any other capital.

Understanding of Capital Gains along with Cost indexation helps us save taxes because of inflation since we purchased the capital. Make sure you understand that before you file your Income Tax Returns for the last financial year.

The book "From the Rat Race to Financial Freedom" has many such investment concepts explained in a very simple and uncomplicated manner.

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• All about Income Tax
• Difference between Financial Year and Assessment Year
• All about Mutual Funds

Cheers

Manoj Arora

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