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What is Capital Gains Indexation?

Capital gain indexation is a process that adjusts the purchase price of a capital asset depending on inflation, potentially lowering your taxable gains. It is specifically beneficial for long-term assets like:

  • Debt Mutual Funds (before amendments in tax rules)

  • Real estate properties (held for more than 24 months)

  • Bonds and other eligible investments.

Using the Cost Inflation Index (CII) released by the Indian government on an annual basis can help you determine the inflation-adjusted cost of acquisition, effectively lowering your total tax liability.

What is the Formula for Computing Indexed Capital Gains?

The formula for calculating the indexed cost of acquisition is as follows:

Indexed Cost = (Purchase Price * CLL of Sale Year) / CLL of Purchase Year

Then,

Long-Term Capital Gain (LTCG) = Sale Value - Indexed Cost - Other Expenses

How to Use the SaveTax Capital Gain Indexation Calculator?

We have simplified using our capital gain indexation calculator in just four simple steps:

  • Step 1: Fill in Purchase Details: Enter the purchase year, cost of acquisition, and any associated purchase expenses.
  • Step 2: Entre Sale Detils: Fill in the sale year, sale price, and any relevant expenses (like brokerage and remittance charges).
  • Step 3: Choose the Type of Asset: Select whether the asset is a property, a mutual fund, or any other type of capital asset.
  • Step 4: Click on "Calculate": Our calculator uses the latest CII values to provide your indexed cost and long-term gains quickly.

Sample Calculation

  • Purchase Price = Rs. 20,00,000 (bought in FY 2010-11, CII = 167)
  • Sale Price: Rs. 50,00,000 (sold in FY 2022-23, CI = 331).
    • Indexed Cost = (20,00,000 * 331/167) = Rs. 39,64,071.
    • LTCG= 50,00,000 - 39,64,071 = Rs. 10,35,929.

This means you will only be taxed on Rs. 10.35 lakh instead of the entire Rs. 30 lakh gain.

What are the Benefits of Using SaveTaxs Capital Gains Indexation Calculator?

Using our tool is not only easy and quick but also provides you with several benefits, such as:

  • Helps in financial planning before asset sales
  • Provides accurate tax estimates for long-term assets
  • Simple and free for both individuals and tax professionals
  • Save significant time as compared to traditional calculation methods
  • Uses the most up-to-date cost inflation index (CII) for providing trustworthy outcomes.

To Conclude

Using our capital gains indexation calculator allows you to make smart and better financial decisions, minimize taxes legally, and strategically time the sale of your assets. Whether you are an investor, property owner, or tax advisor. Savetaxs capital gains indexation calculator tool provides a quick and dependable method to estimate your indexed long-term capital gains.

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Frequently Asked Questions

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It helps calculate the indexed cost of acquisition and improvement using the official cost inflation index (CII), lowering taxable gains on long-term assets. 

Indexation is applicable to long-term assets such as real estate, debt mutual funds, bonds, unlisted shares, etc. (equity and STT-paid assets typically use flat rates). 

Indexation reduces capital gains tax by inflating your purchase cost with inflation factors (CII), reducing the net gain by increasing the basis of computation. 

Yes, we ensure to keep the tool updated, and it will reflect the latest data under Union Budget 2025 and FY 2025-2026 rates. 

The calculator uses thresholds to determine between long-term vs short-term:

  • Less than 24 months (all assets) will be classified as long-term. 
  • Holding period is input through purchase and sale dates. 

Yes, NRIs selling property or specified assets in India can use the calculator to compare gains with and without indexation. 

Our tool shows the indexed cost and net capital gain. However, you may have to compute the tax separately depending on the rates. (e.g, 12.5% or 20%) based on the regime and asset. 

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