Government Notifies Cost Inflation Index (CII) as 376 for FY 2025-26: What It Means for You

Introduction

When calculating long-term capital gains in India, one number is crucial: the Cost Inflation Index (CII). The Central Board of Direct Taxes (CBDT) issues the CII every year. It adjusts the purchase price of capital assets for inflation, which reduces your taxable capital gains.

On July 1, 2025, the Indian Government released a notification updating the Cost Inflation Index for the financial year 2025-26 (FY 2025-26). According to this notification, the CII is set at 376. This change will apply to the Assessment Year 2026-27 and beyond.

But what does this mean for you as a taxpayer or investor? Let’s break it down.Click Here

What is Cost Inflation Index (CII)?

The Cost Inflation Index is a tool under Section 48 of the Income Tax Act, 1961. It helps calculate the indexed cost of acquiring a capital asset. In simple terms, it adjusts the original purchase price of an asset for inflation, so you don’t pay tax on gains that result only from rising prices over time.

This is particularly important if you sell assets like real estate, gold, bonds, or unlisted shares after holding them for more than 24 or 36 months.

CII for FY 2025-26 Set at 376

The Central Government notified the CII for FY 2025-26 as 376 through Notification No. 70/2025, dated July 1, 2025. This value will be added to the original notification from June 5, 2017, which contains the complete table of CII values starting from the base year 2001-02.

This new index will:

• Take effect from April 1, 2026
• Apply to all capital gains assessed in the Assessment Year 2026-27
• Be used to calculate the indexed cost for capital assets sold during FY 2025-26

Who Should Care About This Update?

This update is important for:

• Individuals or businesses selling capital assets between April 1, 2025 and March 31, 2026
• Investors looking to calculate long-term capital gains
• Taxpayers filing ITRs for AY 2026-27 and later
• Anyone claiming the indexation benefit to lower capital gains tax

Example: How CII Affects Your Capital Gain

For instance, if you bought a piece of land in FY 2010-11 for ₹5,00,000 and sold it in FY 2025-26 for ₹15,00,000, here’s how indexation works:

• CII for FY 2010-11 = 167
• CII for FY 2025-26 = 376

Indexed Purchase Price:

₹5,00,000 × (376 ÷ 167) = ₹11,25,749

Capital Gain:

₹15,00,000 – ₹11,25,749 = ₹3,74,251

Without indexation, you would pay tax on ₹10 lakh of gains. With indexation, the taxable gain decreases to ₹3.74 lakh, resulting in a lower tax.

Key Takeaways

• The Cost Inflation Index for FY 2025-26 is 376.
• This applies from April 1, 2026, for AY 2026-27 and later.
• It is essential for calculating long-term capital gains on assets like property, gold, mutual funds, and more.
• Knowing the correct CII can help you file an accurate and optimized tax return.

Need Help with Capital Gain Calculation or ITR Filing?

At MyITROnline, we make tax filing easy, fast, and accurate. Whether you’re dealing with property sales, stock investments, or mutual funds, our team can help you compute capital gains with the latest indexation updates.

Visit: https://www.myitronline.com

Call us: 9971055886, 8130309886

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