Cost Inflation Index for FY 2025-26 - Capital Gains Tax Guide for Indian Taxpayers

What is Cost Inflation Index?

The Cost Inflation Index, commonly called CII, is a notified index used under Indian income tax law to adjust the cost of certain capital assets for inflation. In simple terms, it recognises that money loses purchasing power over time. A property bought for ₹20 lakh many years ago and sold for ₹90 lakh today may not represent a real economic gain of ₹70 lakh because inflation has increased asset prices, construction costs and replacement value over the years.

Where indexation is allowed, CII helps calculate an indexed cost of acquisition and, where applicable, an indexed cost of improvement. This inflation-adjusted cost is then used for computing long-term capital gains. The official Income Tax Department explains that indexation adjusts cost to neutralise inflation's impact and the Cost Inflation Index is used for this purpose in permitted cases. You can verify the official CII table through the Income Tax Department Cost Inflation Index utility.

For taxpayers, CII is not just a number in a table. It affects cash-flow planning, reinvestment decisions, advance tax, ITR reporting and the decision to seek expert support before selling an asset. The wrong CII year, wrong purchase date, missing improvement cost, or incorrect assumption about indexation availability can lead to an incorrect capital gains figure.

CII for FY 2025-26: The notified index is 376

The Cost Inflation Index for FY 2025-26 is 376. FY 2025-26 corresponds broadly to income earned or transactions undertaken between 1 April 2025 and 31 March 2026, and it is relevant for Assessment Year 2026-27. If a permitted asset is transferred during FY 2025-26 and indexation is available, 376 is generally used as the CII of the year of transfer.

This index is higher than the FY 2024-25 CII of 363. The increase reflects inflation adjustment for the year. However, after the capital gains amendments introduced in 2024, the practical use of CII has become narrower. That is why this guide focuses not only on the number 376, but also on the question that matters more: where can CII 376 actually be used?

For a taxpayer selling an old residential house, commercial property, plot of land, inherited property or redeveloped asset, CII 376 may still be important if the legal conditions are satisfied. For a taxpayer selling listed equity shares or equity mutual funds, the calculation may follow different rules where indexation is not relevant. For business assets, depreciable assets, non-resident transactions, slump sale, ESOPs, unlisted shares, foreign assets or complex family transfers, expert analysis becomes even more important.

Capital gains tax rules after 23 July 2024: Why CII is no longer universal

Before using the FY 2025-26 CII, understand the post-2024 landscape. The Income Tax Department’s capital gains guidance states that long-term capital gains on capital assets transferred on or after 23 July 2024 are generally taxed at a uniform rate of 12.5% and indexation is no longer available. However, relief has been provided for resident individuals and resident HUFs transferring land or building acquired before 23 July 2024. In such cases, they may compare tax under the new 12.5% without-indexation method with the old 20% with-indexation method if the conditions are met. You can review the official guidance on the Income Tax Department capital gains page.

This distinction is crucial. A taxpayer may know the CII value but still file incorrectly if they assume indexation applies to every long-term asset. The correct approach starts with four questions:

• What asset was sold? Land, building, shares, mutual funds, gold, bonds, business asset, foreign asset or another capital asset.
• When was it acquired? Before or after 23 July 2024, and if before 1 April 2001, whether fair market value as on 1 April 2001 is relevant.
• Who is the seller? Resident individual, HUF, NRI, company, firm, LLP, trust or another taxpayer category.
• When was it transferred? FY 2025-26 or another financial year, because the transfer-year CII changes.

For investors and families, this means tax planning should happen before the sale deed is executed, not after the transaction has been completed. If reinvestment exemptions under sections such as 54 or 54F may be relevant, timelines and documentation also need attention.

Indexed cost formula for capital gains tax

Where indexation is permitted, the standard formula for indexed cost of acquisition is:

If the asset was acquired before 1 April 2001 and the law allows it, the taxpayer may generally consider the actual cost or fair market value as on 1 April 2001, depending on the facts and applicable provisions. Since FY 2001-02 is the current base year with CII 100, many old property calculations start with valuation as on 1 April 2001.

For improvement cost, the formula is similar:

Transfer-related expenses such as brokerage, legal expenses directly connected with transfer, registration facilitation expenses, and certain documented selling expenses may also affect computation depending on facts. Always keep invoices, bank records and supporting documents.

Simple calculation example using CII 376

Assume a resident individual bought eligible land in FY 2011-12 for ₹30,00,000 and transfers it in FY 2025-26. The CII for FY 2011-12 is 184 and the CII for FY 2025-26 is 376.

This indexed cost is not automatically the final tax computation. The taxpayer must still consider sale consideration, transfer expenses, cost of improvement, exemptions, legal eligibility for indexation, and the comparison between permitted tax methods.

Recent Cost Inflation Index table

The following table gives recent CII values frequently needed for capital gains calculations. For older years and final filing, verify the value from official sources before submitting your return.

How CII 376 may affect property sale capital gains tax

Property-sale calculations are where FY 2025-26 CII is most likely to matter for many Indian taxpayers. A house, plot, inherited property, jointly held property, redeveloped flat or commercial unit often has a long holding period and significant inflation impact. Even a small error in indexed cost can change taxable gains by lakhs of rupees.

For resident individuals and HUFs eligible for grandfathering relief on land or building acquired before 23 July 2024, the comparison may look like this:

This comparison should be done before filing the ITR. If you need expert-assisted computation, WealthSure’s capital gains tax support can help review asset documents, purchase year, improvement records, exemption possibilities and ITR reporting requirements.

Documents usually needed for a property capital gains computation

• Purchase deed, allotment letter or inheritance documents.
• Sale deed, agreement to sell and payment proof.
• Stamp duty, registration and brokerage details.
• Cost of improvement invoices and proof of payment.
• Valuation report if fair market value as on 1 April 2001 is relevant.
• Home loan closure, society NOC or builder correspondence where relevant.
• Reinvestment documents for exemption claims, if any.
• TDS certificate, challan or buyer deduction records.

Practical examples: How Indian taxpayers may use the Cost Inflation Index for FY 2025-26

Common mistakes to avoid while using CII for capital gains tax

Capital gains errors are common because taxpayers often work backwards from the sale value instead of building a full computation. Avoid these mistakes:

• Using the wrong transfer year CII: Use FY 2025-26 CII of 376 only for transfers in FY 2025-26 where indexation is permitted.
• Assuming indexation applies to every asset: Post-23 July 2024 rules restrict indexation for many long-term capital assets.
• Ignoring the 12.5% vs 20% comparison: Eligible resident individuals or HUFs selling qualifying land or building may need a comparative calculation.
• Forgetting cost of improvement: Renovation or improvement cost may matter if properly documented and legally eligible.
• Using unverified fair market value: Old assets may require careful valuation support, especially for pre-2001 property.
• Not matching ITR schedules: Capital gains need correct schedule reporting, not just a final tax figure.
• Missing advance tax impact: A large capital gain can create advance tax or interest implications.
• Wrong ITR form selection: Capital gains are often reported in ITR-2 or ITR-3 depending on the taxpayer’s income profile. WealthSure’s ITR-2 capital gains filing support can help where salary, property and investment gains are involved.

Capital gains tax checklist before filing your return

Use this checklist before you submit your ITR for a transaction involving CII, property, land or other capital assets.

If your sale has already happened and you are unsure about computation, do not wait until the filing deadline. WealthSure’s ask a tax expert service can help you clarify the calculation and next steps.

How WealthSure can help with CII, capital gains tax and ITR filing

Capital gains tax is a document-driven calculation. WealthSure combines technology-led workflows with expert review so that taxpayers can move from confusion to a defensible computation. Depending on your case, WealthSure may help with:

• Capital gains calculation using correct CII and asset classification.
• Comparison of tax under permitted indexed and non-indexed methods.
• ITR form selection and expert-assisted tax filing.
• Review of property documents, transfer expenses and improvement records.
• Guidance on exemption planning and reinvestment timelines.
• Advance tax calculation support where gains arise during the year.
• Revised or updated return filing if a past capital gains transaction was reported incorrectly.
• Notice response support if the Income Tax Department seeks clarification.
• Personal tax planning for taxpayers planning asset sales, reinvestments or family transfers.

Where securities, mutual funds or market-linked investments are involved, taxpayers should also understand regulatory and risk disclosures. The Securities and Exchange Board of India provides investor-focused regulatory resources, while the Income Tax e-Filing portal should be used for filing, tax payment, verification and status tracking.

FAQs on Cost Inflation Index for FY 2025-26 and Capital Gains Tax

Conclusion: Use CII 376 carefully, not casually

The Cost Inflation Index for FY 2025-26 - Capital Gains Tax search usually starts with one question: “What is the CII value?” The answer is simple: 376. But the real tax decision is more nuanced. You must first confirm whether indexation is available for your asset, whether the 23 July 2024 rule change affects the computation, whether a grandfathering comparison applies, and whether your documents support the cost, improvement and exemption claims you plan to report.

For small and straightforward cases, official tax utilities and careful self-review may be enough. For property sales, inherited assets, NRI transactions, old assets, large gains or exemption planning, expert-assisted support can reduce the risk of wrong computation, incorrect ITR schedules, TDS mismatch or avoidable notices. Proactive capital gains planning also connects directly with broader wealth decisions: whether to reinvest, repay debt, build retirement corpus, diversify assets or plan family transfers.

At WealthSure, we don’t just file taxes — we simplify your financial journey and help you build long-term wealth with confidence.