CBDT has announced the Long awaited Cost Inflation index for the Financial Year 2012-13 . Cost Inflation index is used to calculate Long term capital gain on sale of Capital assets.
Long term capital gain in case of assets other than securities is applicable where holding period of asset is more than 3 years and in case of securities the period is one year.
Calculation of Long Term Capital Gains (LTCG))
Long Term Capital Gains is computed as below :
LTCG = Full value of consideration received or accruing – (indexed cost of acquisition + indexed cost of
improvement + cost of transfer)
Where, Indexed cost of acquisition =Cost of acquisition x CII of year of transfer /CII of year of acquisition
Indexed cost of improvement =Cost of improvement x CII of year of transfer /CII of year of improvement
CII = Cost Inflation Index (Please see chart given below)
Tax liability on LTCG to be taken at 20%.
If total income other than LTCG is less than zero slab,LTCG over the zero slab only attracts tax at 20%.
Attached is the Cost Inflation Index
