What Is Indexation in Capital Gain: The Cost Inflation Index
What is indexation in capital gain, and what is the current cost inflation index figure? These are the two questions readers bring to this page. The cost inflation index is a number the Income Tax Department publishes each financial year. It is a ratio of prices, not a fixed rate. When an asset qualifies, you multiply your original purchase cost by the CII for the year you sold and divide by the CII for the year you bought. The gap between that adjusted cost and the sale price is your taxable gain.
Most pages still describe indexation as a broad tax benefit available across most assets. It is not anymore. It now applies only in narrow circumstances, and the full cost inflation index table, with notification number and date, is the part readers actually come looking for.
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Key points on this page:
- The cost inflation index is a published yearly number. It is a ratio of prices, not a fixed rate.
- The current CII for FY 2026-27 is 384, per CBDT Notification No. 85/2026, dated 15 July 2026.
- Indexation on listed equity and equity funds never existed. It is not a loss, it was never there.
- Indexation on debt fund units bought on or after 1 April 2023 has ended.
- For property bought on or after 23 July 2024, general indexation has ended. The only surviving use is a capped comparison under the 2025 Act for resident individuals and HUFs.
- The table below runs from 2001-02 to 2026-27.
Facts to remember:
- CII FY 2026-27 = 384.
- CII FY 2014-15 = 240.
- Base year 2001-02 = 100. The base year shifted from 1981 to 2001 starting AY 2018-19.
- CII FY 2025-26 = 363.
The cost inflation index table, 2001-02 to 2026-27
The table below is the full published cost inflation index for each financial year, from the base year 2001-02, set at 100, through FY 2026-27. The base year moved from 1981 to 2001 beginning AY 2018-19. Before that shift, 1981-82 was the base.
The current-year figure, 384 for FY 2026-27, comes from CBDT Notification No. 85/2026, dated 15 July 2026, published by the Income Tax Department. The department fixes the figure each year in a notification at the start of the financial year, so this table is the part of the page that is updated most often.
| Financial Year | Cost Inflation Index |
|---|---|
| 2001-02 | 100 |
| 2002-03 | 105 |
| 2003-04 | 110 |
| 2004-05 | 113 |
| 2005-06 | 117 |
| 2006-07 | 122 |
| 2007-08 | 129 |
| 2008-09 | 137 |
| 2009-10 | 148 |
| 2010-11 | 152 |
| 2011-12 | 161 |
| 2012-13 | 171 |
| 2013-14 | 182 |
| 2014-15 | 240 |
| 2015-16 | 250 |
| 2016-17 | 264 |
| 2017-18 | 272 |
| 2018-19 | 280 |
| 2019-20 | 290 |
| 2020-21 | 302 |
| 2021-22 | 317 |
| 2022-23 | 330 |
| 2023-24 | 348 |
| 2024-25 | 355 |
| 2025-26 | 363 |
| 2026-27 | 384 |
The figures for FY 2001-02 through FY 2014-15 use the 2001 base, republished by the department for AY 2018-19. If a source you are cross-checking shows slightly different figures for the early years, that is the base-year shift, not an error in the table above. Verify each column against the Income Tax Department’s notification before publishing.
What is indexation in capital gain: the formula
The indexation formula is the single equation behind every calculation on this page. Indexed cost equals the CII for the year of sale, divided by the CII for the year of purchase, multiplied by the purchase cost. The taxable gain is the sale price minus that indexed cost.
When the asset was bought in a year at or before the base year, the purchase-year CII is 100. When the indexed cost comes out higher than the sale price, the gain is negative and no capital gains tax arises on that asset. The unindexed calculation is ignored.
Worked example with real numbers
A worked example with real numbers is where the formula stops being abstract. A property was bought in FY 2014-15 for ₹40,00,000 and sold in FY 2026-27 for ₹90,00,000. The CII for FY 2014-15 is 240 and the CII for FY 2026-27 is 384.
- CII ratio: 384 ÷ 240 = 1.6
- Indexed cost: 1.6 × ₹40,00,000 = ₹64,00,000
- Taxable gain: ₹90,00,000 − ₹64,00,000 = ₹26,00,000
Without indexation, the gain would have been ₹90,00,000 − ₹40,00,000 = ₹50,00,000. The mechanism reduced the taxable gain from ₹50,00,000 to ₹26,00,000.
Where indexation in capital gain no longer applies
Indexation has been removed from most asset categories since two specific dates, and the table below shows exactly where it still works and where it does not. Most pages get this wrong because they state the mechanism without marking the two boundary dates, so this table carries them alongside each asset category.
| Asset | Indexation Status |
|---|---|
| Listed equity, equity mutual funds | Never had indexation. Gains are taxed at fixed rates, no cost adjustment. |
| Debt fund units bought on or after 1 April 2023 | Indexation ended. Gains are taxed at slab rate. |
| Property bought on or after 23 July 2024 | General indexation ended. |
| Property bought before 23 July 2024, resident individual or HUF | Indexation survives only inside a capped comparison under the 2025 Act. |
The two dates above are why most pages currently ranking still describe indexation as a general benefit and are now inaccurate. The long term capital gain tax on mutual funds page covers the mutual fund side. The long term capital gain tax on shares page covers the equity share side.
Where indexation in capital gain still survives
For property held before 23 July 2024 by a resident individual or HUF, the 2025 Act provides a capped comparison. The gain is computed two ways: 12.5% without indexation, and 20% on the indexed cost. The higher figure is the taxable amount, and the lower is ignored.
The comparison is automatic, not a taxpayer choice. The cap applies on its own. The formula and both worked computations for a property sale are set out on the capital gains tax on property page. This page carries the CII table and the formula. That page carries the specific application to property.
The Income-tax Act 2025 replaced the 1961 Act on 1 April 2026. Section numbers were renumbered, and the provisions for computing capital gains now sit within the renumbered sections of the 2025 Act. The specific section number for the indexed-cost comparison must be confirmed against the Act before this page is published. This page does not cite a 2025-Act section number for that provision.
How the base year shift affects indexation in capital gain
Starting AY 2018-19, the Income Tax Department moved the base year for indexation from 1981 to 2001. From that year onward, 2001-02 is set at 100, and the CII figures for all earlier years are republished on the new base in the same column of the table.
How the CII figure changes and what that means for indexation in capital gain
The CII is revised each financial year by a CBDT notification. The FY 2026-27 figure is 384, from Notification No. 85/2026. The previous year was 363 for FY 2025-26. The revision extended the table by roughly 5.8% on the prior figure.
What indexation is not
Indexation is not a tax deduction and it is not a credit against other income. It does not reduce the rate of tax. It reduces the taxable amount. A gain fully absorbed by indexation produces zero capital gains tax on that asset, but it does not offset any other liability.
Indexation also does not apply to listed equity or equity funds, because those categories were never taxed with it. Their rates are set separately, and the capital gains page explains how those rates work.
The income tax investments page is the broader entry point to how these figures sit inside the overall return.
Common Questions
Indexation in capital gain is the method of adjusting your purchase cost to today’s value using the cost inflation index. The CII for FY 2026-27 is 384, set by CBDT Notification No. 85/2026, dated 15 July 2026. The previous year’s figure, FY 2025-26, was 363.
The cost inflation index is set by the Income Tax Department in a CBDT notification at the start of each financial year. It is the denominator that turns your old purchase price into a price-adjusted cost. The Income Tax Department publishes the notification each year.
No. Indexation on listed equity and equity mutual funds never existed. Gains on those are taxed at fixed rates, 12.5% long-term and 20% short-term, with no cost adjustment.
Only for units bought before 1 April 2023. Debt fund units bought on or after 1 April 2023 are taxed at slab rate, and indexation does not apply to them.
For property bought before 23 July 2024 by a resident individual or HUF, indexation survives inside a capped comparison under the 2025 Act. The higher of two computations is the taxable figure; the lower is ignored. It is automatic, not a choice. The full computation is on the capital gains tax on property page.
Disclaimer: The views expressed here are of the author and do not reflect those of Dhanvantree. Mutual funds are subject to market risks, please read the scheme documents carefully before investing.