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Inflation May 2026 · 9 min read

Cost Inflation Index (CII): How Indexation Reduces Long-Term Capital Gains Tax

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Renjith Pillai

Senior Systems Architect & Financial Analyst

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The Cost Inflation Index (CII) allows property sellers to inflate their original purchase price in line with inflation, dramatically reducing taxable long-term capital gains.

Indexed Cost of Acquisition Formula

Indexed Cost = Original Purchase Price × (CII of Sale Year / CII of Purchase Year). Tax is charged only on gains above this indexed cost base.

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Frequently Asked Questions

Where can I find official CII numbers?+
The Central Board of Direct Taxes (CBDT) notifies CII values annually in the Income Tax rules.
Does indexation apply to stocks?+
No, equity shares and equity mutual funds do not receive CII indexation benefits.

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Renjith Pillai

Senior Software Engineer & Network Specialist

Renjith Pillai is a senior software engineer and financial tools author with over 12 years of experience. He built EasyCalcs.in to provide high-precision, privacy-first technical tools and financial calculators for investors, engineers, and consumers.