What is Cost Inflation Index (CII)

What is the cost inflation index?

The Cost Inflation Index (CII) is a technique used to determine the annual rise in the price of an asset due to inflation. For the fiscal year 2023-24, the Cost Inflation Index (CII) is 348.

This index is determined by the Central Government and published in the official gazette to measure inflation. Section 48 of the Income Tax Act of 1961 defines this index, which the government publishes each year.

Calculation of CII

The Central Board of Direct Taxes (CBDT) calculates the Cost Inflation Index, which is based on the Consumer Price Index (CPI) for industrial workers. The CPI measures the change in the price of a collection of products and services consumed by a certain group of people. This is used to calculate the inflation rate.

CII = [(CPI for the year of calculation)/(CPI for the base year)]*100

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