Cost Inflation Index (CII) for Tax Year 2026-27 notified: Here's what it means for capital gains tax

The Income Tax Department has notified the Cost Inflation Index (CII) which is used by taxpayers to calculate the inflation-adjusted cost of certain capital assets while computing long-term capital gains tax relevant to the tax year 2026-27.

The CII for the tax financial year 2026-27 has been notified as 384. This figure (384) will be used to compute the indexed cost of acquisition for assets sold in TY 2026-27. This new index number will take effect on April 1, 2026.

The new index will be used for computing the indexed cost of acquisition wherever indexation benefits are available under the Income Tax Act, 2025.


The Cost Inflation Index (CII) for the financial year 2025-26 was 376.

As per the Income Tax Department social media post on X (previously known as X) states, “CBDT notifies the Cost Inflation Index (CII) for FY 2026-2027 vide Notification No. 85/2026. The Cost Inflation Index for FY 2026-27 relevant to tax year 2026-27 is 384.”

What is the Cost Inflation Index?

Every fiscal year, the Income Tax Department publishes the Cost Inflation Index (CII) to be used to calculate indexation benefits. This figure is used to compute the inflation-adjusted cost of a long-term capital asset. To determine the taxable capital gain, the inflation-adjusted acquisition cost is removed from the asset's sale price. However, indexation benefits are only available for specific assets.

In simple terms, a higher CII increases the inflation-adjusted purchase cost of certain long-term capital assets like specified property. Naturally, if your cost is higher due to inflation, it means lower taxable capital gains, and therefore lower net tax. This only works in assets where indexation is still available.

Thus, the increase in the CII for the Tax Year 2026-2027 means that where indexation benefit is available, taxpayers can claim a higher inflation-adjusted cost of acquisition. This reduces the taxable long-term capital gains and, consequently, the final tax liability.

For example, if you purchased a property 20 years ago for Rs 20 lakh and have now sold it this year, so the indexed cost is higher since inflation is higher and factoring that the CII of 384 for the Tax Year 2026-27 is higher than that of FY 2025-2026 at 376, the indexed cost will be marginally higher for assets sold during this year, thus ultimately resulting in lower taxable capital gains.

CII list since 2001-02

Financial Year	Cost Inflation Index (CII)
2026-27 (tax year)	384
2025-26	376
2024-25	363
2023-24	348
2022-23	331
2021-22	317
2020-21	301
2019-20	289
2018-19	280
2017-18	272
2016-17	264
2015-16	254
2014-15	240
2013-14	220
2012-13	200
2011-12	184
2010-11	167
2009-10	148
2008-09	137
2007-08	129
2006-07	122
2005-06	117
2004-05	113
2003-04	109
2002-03	105
2001-02	100

Is the CII useful for taxpayers?

However, with the elimination of indexation advantages under the Finance Act, 2024, its significance has decreased, but it will still be helpful for property or buildings purchased before July 23, 2024.

What are long-term Capital Gains (LTCG)?

As per the Income tax website, “Taxable at 12.5% without indexation. However, resident individuals and HUFs can opt for a 20% rate with indexation for land, a building, or both acquired before July 23, 2024, and transferred on or after July 23, 2024.”