Any capital asset held by the taxpayer for a period of not more than 36 months immediately preceding the date of its transfer will be treated as short-term capital asset. However, in respect of certain assets like shares (equity or preference) which are listed in a recognised stock exchange in India (listing of shares is not mandatory if transfer of such shares took place on or before July 10, 2014), units of equity oriented mutual funds, listed securities like debentures and Government securities, Units of UTI and Zero Coupon Bonds, the period of holding to be considered is 12 months instead of 36 months.
Any capital asset held by the taxpayer for a period of more than 36 months immediately preceding the date of its transfer will be treated as long-term capital asset. However, in respect of certain assets like shares (equity or preference) which are listed in a recognised stock exchange in India (listing of shares is not mandatory if transfer of such shares took place on or before July 10, 2014), units of equity oriented mutual funds, listed securities like debentures and Government securities, Units of UTI and Zero Coupon Bonds, the period of holding to be considered is 12 months instead of 36 months.
Indexation is a process by which the cost of acquisition is adjusted against inflationary rise in the value of asset. For this purpose, Central Government has notified cost inflation index.
The benefit of indexation is available only to long-term capital assets.
For computation of indexed cost of acquisition following factors are to be considered:
Indexed cost of acquisition is computed with the help of following formula :
(Cost of acquisition × Cost inflation index of the year of transfer of capital asset) / (Cost inflation index of the year of acquisition)
Cost Inflation Index | |||||||
Financial Year | CII | Financial Year | CII | Financial Year | CII | Financial Year | CII |
Before 1/4/1981 | 100 | 1989-90 | 172 | 1998-99 | 351 | 2007-08 | 551 |
1981-82 | 100 | 1990-91 | 182 | 1999-00 | 389 | 2008-09 | 582 |
1982-83 | 109 | 1991-92 | 199 | 2000-01 | 406 | 2009-10 | 632 |
1983-84 | 116 | 1992-93 | 223 | 2001-02 | 426 | 2010-11 | 711 |
1984-85 | 125 | 1993-94 | 244 | 2002-03 | 447 | 2011-12 | 785 |
1985-86 | 133 | 1994-95 | 259 | 2003-04 | 463 | 2012-13 | 852 |
1986-87 | 140 | 1995-96 | 281 | 2004-05 | 480 | 2013-14 | 939 |
1987-88 | 150 | 1996-97 | 305 | 2005-06 | 497 | 2014-15 | 1024 |
1988-89 | 161 | 1997-98 | 331 | 2006-07 | 519 | 2015-16 | 1081 |
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