Indexation benefit: Indexation lets taxpayers adjust an asset's purchase

Indexation lets taxpayers adjust an asset's purchase price for inflation using the Cost Inflation Index (CII). This adjustment lowered taxable gains. For instance, if someone bought a property for ₹50 lakh in 2015 (CII: 200) and sold it in 2025 (CII: 363), the indexed cost would be ₹90.75 lakh. Removal of indexation benefit on sale of property: Why 2001 is a critical year when selling your house Previously, individuals in India could leverage what is known as the ' indexation benefit ' to minimize the tax on the profit earned from selling a property. This benefit allowed the variance between the purchase and sale price of a property (i.e., the profit) to be adjusted by the prevailing inflation rate during the period when the property was owned. Therefore, it acted as a tool to ... Indexation is a process by which the cost of acquisition of an asset can be indexed. Know its meaning, calculation, benefit in mutual funds. Summary: Finance Bill, 2024 introduced key amendments to Section 112 of the Income Tax Act, reducing the long-term capital gains tax rate from 20% to 12.5% while withdrawing the indexation benefit for transfers after July 23, 2024.