What is Indexation?
Indexation adjusts your purchase price for inflation using the Cost Inflation Index (CII) published by the Income Tax department. This reduces your taxable capital gains on long-term assets like property and gold, lowering your tax liability.
Formula
Indexation Calculation:
Indexed Cost = Purchase Price × (CII at Sale / CII at Purchase) Indexed Capital Gain = Sale Price - Indexed Cost Tax = 20% × Indexed Capital Gain CII Base Year: 2001-02 = 100 Note: Indexation benefit removed for debt mutual funds from FY 2023-24.
How to use this calculator
Enter the purchase price and year, then the sale price and year. The calculator uses CII values to compute the indexed cost and resulting tax savings.