How to get cost inflation index (CII) for LTCG calculation for earlier years
I had bought a flat in 1992 and want to sell it now. To calculate the indexed cost of acquisition, the cost inflation index (CII) is available only from 2001-2. How do I get the index for earlier years?
Preeti Khurana, Director of Advocacy and Regulations, ClearTax: Many taxpayers were facing difficulty in computing capital gains using 1 April 1981 as base due to the non-availability of relevant information.
The Finance Act, 2017, shifted the base year to 2001 for computing the fair market value (FMV) of assets. At present, the CII for 2001 starts at 100.
The cost of acquisition of an asset acquired before 1 April 2001 shall be taken as the FMV on 1 April 2001, or the actual cost as chosen by the taxpayer. The cost of improvement shall include only those capital expenses that are incurred after 1 April 2001.
Shifting the base year from 1981 to 2001 has helped capture the inflated cost of property much better, reducing capital gains and tax burden for the taxpayer.
Consequent to grandfathering and subsequent merger of companies, how is the base price determined for long-term capital gain or loss? For example, on 31 January 2018, the share price of HDFC Bank was Rs 672 and that of HDFC was Rs 1,963. What will be the base price of HDFC Bank’s share (merged entity) when sold for tax purposes?
Amit Maheshwari, Partner, AKM Global: In case of merger, any transfer of shares in the transferer entity by shareholders is not subject to capital gains tax if the shares have been received pursuant to that merger and the transferee is an Indian company.
