When asset is acquired bv assessee himself
(a) Acquired prior to 1.4.1981
Indexed Cost Acquisition
Fair Market Value on 01.04.1981 or cost of acquisition whichever is high × Cost of Inflation Index for the
year of transfer/100.
(b) Acquired after 1.4.1981,
Indexed cost of Acquisition = (Cost of Acquisition ×CII for year of transfer) / CII for year of acquisition
Indexed Cost of Improvement in both the above cases
=(Cost of Improvement ×CII for year of transfer) / CII for year of Improvement
ICI can be computed only if it is incurred after 01.04.1981.
When assessee received the asset u/s 47
(c) Asset acquired prior to 1.4.1981 by previous owner and received by the assessee prior to 1.4.1981.
lCA = FMV on 1.4.81 or Cost of acquisition by previous owner whichever is high x CII for year of transfer/
(d) Asset acquired prior to 1.4.81 by previous owner and received by the assessee after 1.4.81.
ICA = FMV on 1.4.81 or Cost of acquisition by previous owner whichever is high x CII for Year of transfer/
CII of year in which it is first held by the assessee.
(e) Asset acquired after 1.4.1981 by previous owner and received by assessee after 1.4.1981.
Indexed Cost of Acquisition = (Cost of acquisition to the previous owner×CII for year of transfer) / CII of year in which the asset is first held by the assessee
In the above cases: Indexed Cost of Improvement = Cost of improvement × CII for year of transfer/ cn for year
List the circumstances in which benefit of indexation is not available
|Nature of LTCA Transferred||Assessee Not Eligible for|
|Bonds/Debentures except Capital Indexed Bonds Issued by Govt.||All Assesses|
|Shares/Debentures of Indian Company acquired by using Convertible Forex under First Proviso to Section 48||Non-Residents|
|Depreciable Assets||All Assesses|
|Slump Sale||All Assesses|
|Units Purchased in Foreign Currency u/s 115AB||Off Shore Fund|
|GDRs purchased in Foreign Currency u/s 115AC Individual||Non-Residents and Resident|
|Securites u/s 115AD||Foreign Institutional Investors|
|Foreign Exchanae Asset u/s 1150||Non-Resident Indian|
Cost Inflation Index as notified by the Central Government is as under:
|Financial Year||Cost inflation Index (CII)||Financial Year||Cost inflation Index (CII)||Financial Year||Cost inflation Index (CII)|