If you are thinking of selling an old house, land, gold or any other long-term capital asset in this financial year (FY 2026-27), then there is a very good news for you. The Income Tax Department has increased the Cost Inflation Index (CII) to 384 for the financial year 2026-27. CII for the financial year 2025-26 was 376. This new index released by the Central Board of Direct Taxes (CBDT) will be of great help to taxpayers in reducing their liability in Long-Term Capital Gains (LTCG) tax.
The annual change in CII (Cost Inflation Index) is an important point for taxpayers as it helps in taking into account the impact of inflation while calculating taxable capital gains. By adjusting the purchase price of an asset in line with inflation, this index ensures that taxes are levied only on the actual increase in value, rather than on profits made simply because of price increases over time.
Cost Inflation Index is notified every year under the Income-Tax Act, 1961. It is used to determine the “indexed cost of acquisition” of a capital asset while calculating long-term capital gains. Indexation increases the purchase cost of an asset by inflation, thereby reducing taxable gains in cases where indexation benefits are available under tax law.
Why has the CII been changed?
CBDT updates the ‘Cost Inflation Index’ (CII) every year keeping in mind the changes in inflation. For FY26-27, this index has been increased to 384 from 376 in the previous financial year. With this, taxpayers will be able to use this new figure while calculating long-term capital gains in the current financial year.
What assets are included in it?
Cost Inflation Index is used to calculate long-term capital gains on eligible capital assets (such as real estate, jewelery and certain securities) where the benefit of indexation is available under the existing tax rules. This new index helps taxpayers determine the inflation-adjusted purchase cost of these assets before calculating taxable gains.
When is an asset considered a long-term capital asset?
The holding period required for long-term capital gains depends on the type of asset. Real estate and unlisted shares generally fall into this category if held for more than 24 months, while listed securities become long-term assets if held for more than 12 months. For most other capital assets, the minimum holding period is more than 36 months.
What does this mean for taxpayers?
With the Cost Inflation Index being 384 for FY 2026-27, taxpayers selling eligible long-term capital assets can use this new index to calculate the purchase cost. This helps determine the actual taxable long-term capital gains and ensures that inflation is properly accounted for in the tax calculations.
