Dear All,

The Central Board of Direct Taxes (CBDT) has, vide Notification No. 70/2025 dated 01st July 2025, notified the Cost Inflation Index (CII) for the Financial Year (FY) 2025-26 (Assessment Year 2026-27) at 376.

Historically, the CII has served as a crucial tool in adjusting the cost of acquisition of capital assets for inflation while computing long-term capital gains (LTCG), thereby ensuring a more equitable tax outcome. However, its overall significance has been considerably diminished pursuant to the withdrawal of indexation benefits under the Finance (No. 2) Act, 2024. This legislative amendment, effective from 23rd July 2024, restricts the applicability of indexation for LTCG computation in respect of long - term capital assets as referred below.

Despite this legislative shift, the CII continues to remain relevant in specific cases where indexation benefits are still applicable. Resident individuals and Hindu Undivided Families (HUFs) may continue to avail indexation for computing LTCG on the transfer of eligible assets such as land, building, or both (acquired prior to 23rd July 2024)  subject to the provisions of the Income-tax Act, 1961.

CBDT Notifies Cost Inflation Index (CII) as 376 for FY 2025-26 9.pdf