CBDT (central board of direct taxes) has announced
the Long awaited Cost Inflation index for the Financial Year 2012-13 .
Cost Inflation index
is used to calculate Long term capital gain (LTCG) on sale of Capital assets.
LTCG in case of
assets other than securities is applicable where holding period of asset is
more than three (3) years and in case of securities the period is one (1) year.
Capital Gain Index
for Financial year 2012-13 is 852
Calculation of
LTCG..!
LTCG is computed as
below :
LTCG = Full
value of consideration received or accruing - (indexed cost of acquisition +
indexed cost of
improvement + cost of
transfer)
Where, Indexed cost
of acquisition = Cost of acquisition x CII of year of transfer / CII of year of
acquisition
Indexed cost of
improvement = Cost of improvement x CII
of year of transfer / CII of year of
improvement
CII = Cost Inflation
Index
Tax liability on LTCG
to be taken at 20 per cent.
If total income other
than LTCG is less than zero slab, LTCG over the zero slab only attracts tax at
20per cent.
