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Cost Inflation Index for Capital Gain – Base changed in Budget 2017

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In Budget 2017, the base for Cost Inflation Index is changed. lets see what the change is and how it wil impact the investors.

Currently, for cost inflation index, the base year is 1981. which means if you have any property acquired before 1981, you need to get the fair market value in 1981 and then apply indexation.

Now, with the proposed changed, the base year will become 2001. This means, if you have any property acquired before 2001, you need to get the fair market value in 2001 and then apply indexation.

In my other post, I gave details of indexation chart from 1981 till 2017 – Read this

What is the impact?

Property Owners:  Experts think that property owners would benefit from this revision in base year. This is because the inflation rate in property market between 1981 and 2001 is not captured in the current index.

For example , between 1981 and 2001, the index has jumped four times from 100 to 406 whereas property prices have surged 10 times in the same period. The shift in base year will help align the index with the actual rise in property rates, and help investors get the full benefit of indexatio.

Gold Investors:  Shift in base year will not have much impact on Gold Investors as the gold prices were mainly appreciated after 2007

In my other post, I gave details of indexation chart from 1981 till 2017 – Read this

If you have any queries related to this article or any other personal finance query ( Investment, Taxation etc), please comment below

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The author is a Chartered Accountant and loves to write about Personal Finance, Wealth Management, Taxation etc. Disclaimer - The articles on this website is for informational and knowledge purposes and should not be treated as financial advice, Please consult your financial advisor before taking any investment decision.

6 comments

  1. Sir

    can u plz elobarte the impact of changes in base year from 1981 to 2001 with example

    suppose Purchase property on Jul 1978 for Rs. 20,00,000 /- & sold in Sep 2013 for Rs. 50,00,000/-

    & if purchase Purchased was on Sep 1992 & Sold in Sep 2013

    wat will be indedxed cost of acquisition in both cases.

    Thanxs in advance for ur advice

    • Hi Vijay, the impact will depend on the increase in the property value.

      If the property value between 1981 and 2001 has increased more than the indexation rate increase, the investor will get benefit.
      During this period, the indexation rate has gone up by 4 times, and if actual property value has increased by more than 4 times, then you will benefit.

  2. The third paragraph needs correction!

  3. Sir how do u find out the fair market value of an apartment for 2001 which govt dept needs to be contacted or is this info obtainable in the web thanks much obliged

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