Calculate how much tax you can save on property sales by adjusting for inflation with indexation. Our tool helps you legally reduce capital gains tax liability.
Indexation is a tax-saving technique that adjusts your property's purchase price for inflation when calculating capital gains. This ensures you don't pay tax on "paper profits" caused by rising prices over time.
The formula for indexed cost is:
Indexed Cost = Purchase Price × (CII Sale Year / CII Purchase Year)
Where CII is the Cost Inflation Index published by the Income Tax Department.
| Financial Year | CII Value |
|---|
Scenario: Bought property in 2010 for ₹20L, sold in 2024 for ₹80L
Calculation:
Indexed Cost = 20,00,000 × (363 / 167) = ₹43.47L
Capital Gains = 80L - 43.47L = ₹36.53L
Tax with Indexation = 20% of 36.53L = ₹7.30L
Tax without Indexation = 20% of 60L = ₹12.00L
Savings: ₹4.70L