CBDT notifies cost inflation index for long-term capital gains in FY26
This story was originally published at 09:26 IST on 2 July 2025
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NEW DELHI – The cost inflation index for 2025-26 (Apr-Mar) used to calculate the inflation adjusted cost on long-term assets to compute capital gains accrued in the respective fiscal year is fixed at 376, the Central Board of Direct Taxes said in a notification Tuesday.
The cost inflation index is used to calculate the long-term capital gains when assets like houses, land, buildings and others, are sold by an individual. When these assets are sold, the profit or gain generated from them remains high due to their high sale price in relation to their acquisition price. As a result, assessees pay a greater income tax on these assets' gains.
In the long run, the application of the cost inflation index for capital gain adjusts the purchase price of assets based on their sale price, resulting in smaller earnings and a lower tax amount. After capital gains are calculated, the income tax payable on such gains is calculated. This cost inflation index number is needed at the time of filing income tax returns in the assessment year 2026-27.
Taxpayers were looking forward to the cost inflation index this year following the government's Budget announcement last year to cut capital gains tax while removing the indexation benefit. The government had lowered the long-term capital gains tax to 12.5% from 20% but removed the indexation benefit.
Following the announcement, property sellers who bought property before Jul. 23, 2024, had two options of paying long-term capital gains tax. They can pay long-term capital gains tax at 20% with indexation benefit, or at 12.5% rate without indexation benefit. The cost inflation index is needed only for taxpayers who will avail the indexation benefit. End
Reported by Priyasmita Dutta
Edited by Tanima Banerjee
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