CMA Intermediate · Direct and Indirect Taxation · Capital Gains
Under the Income-tax Act, 2025, an asset acquired by an assessee in the tax year in which the Cost Inflation Index was 200 is transferred in a year with index 300, and its cost was Rs 6,00,000. Using the statutory proportion, what is the indexed cost of acquisition?
The indexed cost is Rs 9,00,000. It is cost multiplied by the CII of the year of transfer over the CII of the first year of holding, so 6,00,000 x 300/200 gives Rs 9,00,000.
- ARs 4,00,000
- BRs 9,00,000Correct
- CRs 6,00,000
- DRs 12,00,000
Explanation
Indexed cost of acquisition bears to cost the same proportion as the CII of the transfer year bears to the CII of the first year of holding. So 6,00,000 x 300/200 = Rs 9,00,000. Inverting the ratio gives Rs 4,00,000.
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