Capital Gains Indexation Calculator

When you sell a property after holding it for a long term (more than 24 months), the profit you make is known as Long Term Capital Gain (LTCG). To ensure you aren't taxed purely on inflation, the government allows the use of a Cost Inflation Index (CII) to adjust your purchase price upward.

The Grandfathering Rule (July 2024 Amendment)

In the Union Budget 2024, the government reduced the LTCG tax rate on real estate from 20% to 12.5%, but simultaneously removed the indexation benefit. However, following public feedback, an amendment was passed offering a choice for older properties:

• For properties bought BEFORE July 23, 2024: You can calculate tax both ways—(A) 12.5% without indexation, and (B) 20% with indexation. You are allowed to pay whichever tax amount is lower.
• For properties bought ON OR AFTER July 23, 2024: Indexation is permanently removed. You must pay a flat 12.5% tax on your capital gains.

Historical Cost Inflation Index (CII) Table

How is Indexed Cost Calculated?

The standard formula provided by the Income Tax Department is:

The same formula is applied to any Cost of Improvement, substituting the Year of Purchase with the Year of Improvement.