The Central Board of Direct Taxes (CBDT) has notified the cost inflation index for the financial year 2022-23.
This notification shall come into force with effect from the 1st day of April, 2023, and shall accordingly apply to the Assessment Year 2022-2023 and subsequent years.
CII number is important as it is used to arrive at the inflation-adjusted purchasing price of assets and thereby long-term capital gains (LTCG).
It is also important to compute the long-term capital gains/long-term capital losses (LTCL) on the assets which have been or are planned to be sold in FY 2021-22. There are two things that people must keep in mind relating to the cost inflation index.
Firstly, his number would be utilized to compute inflation-adjusted cost only for those assets where inflation-adjusted (indexation benefit) is permitted. Thus, the CII value could not be used to reach LTCG/LTCL on equity mutual funds. Secondly, this CII number would be necessary to compute LTCG for Financial Year 2021-22. The taxes on these gains would be paid by you while filing your income tax returns (ITR) for Financial Year 2021-22 (AY 2022-23), that is, next year.
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