Indexation Benefit

Tax Glossary Definition

Indexation Benefit

Indexation Benefit refers to revising the purchase price of a long-term capital asset using the Cost Inflation Index (CII) to reflect inflation. This adjustment increases the asset’s cost base, which helps lower the taxable amount of capital gains. Example: Suppose a property bought for ₹30 lakh in 2010 has an indexed value of ₹45 lakh in 2024. If it sells for ₹60 lakh, the long-term capital gain (LTCG) will be ₹15 lakh (₹60 lakh – ₹45 lakh).

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