In case of gifted Assets, indexation benefit is available from the year of acquisition of the previous owner
Dec 30, 2009 Income Tax Case Laws
This article summarizes a recent ruling of the Special Bench (SB) of the Mumbai Income Tax Appellate Tribunal (ITAT) [ITA No. 7315/Mum/2007] in the case of DCIT vs. Manjula Shah (Taxpayer) which held that, in the case of gifted capital asset, indexation benefit is available to a donee from the year of its acquisition by the previous owner. The SB adopted a purposive construction of the definition of ‘Indexed Cost of Acquisition’ (ICOA) by looking at the scheme of the Indian Tax Law (ITL), which seeks to grant the benefit of cost and holding period of the previous owner to the donee.
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Tags: acquisition, capital asset, consumer price index, dcit, donee, financial assets, holding period, Income Tax, indexation, inflation index, itat, itl, long term capital, long term capital gains
Indexed cost of gifted assets has to be determined with reference to previous owner
Nov 6, 2009 Income Tax Case Laws
SUMMARY OF THE CASE LAW
The assessee transferred a capital asset which was received by her by way of gift on 1.2.2003. The previous owner had acquired the capital asset on 29.1.1993. In computing capital gains, the assessee claimed that the indexed cost of acquisition had to be worked out by taking the date of acquisition by the previous owner.
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Tags: capital asset, capital gains, gifted assets, index of gifted assets, indexation, inflation index
Cost Inflation Index for Financial Year 2009-10 and Assessment year 2010-11 notified
Sep 10, 2009 Income Tax
NOTIFICATION NO : 67/2009, Dated: September 9, 2009
In exercise of the powers conferred by clause (v) of the Explanation to section 48 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), Central Board of Direct Taxes, number S.O.709(E), dated the 20th August, 1998, namely :-
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Tags: central government, Cost Inflation Index, cost inflation index a.y. 2010-11, cost inflation index f.y. 2009-10, department of revenue, direct taxes, finance department, government of india, income tax act, income tax act 1961, inflation index, ministry of finance
RBI expcted to keep key policy rates unchanged in the monetary policy review
Jul 28, 2009 RBI
The Reserve Bank of India might change its bias towards softening interest rates into a more cautious outlook but is expected to keep key policy rates unchanged in the monetary policy review on Tuesday. At the same time, banking sources close to the development said the central bank could raise its growth target from 5-6 per cent to 6.5 per cent to accommodate the impact of an improving monsoon and the growth impetus provided through various fiscal and monetary stimulus packages earlier in the year.
The cautious outlook on interest rates is primarily to accommodate rising inflationary expectations in the economy.
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Tags: cash reserve ratio, consumer price index, global credit, inflation index, inflation rates, inflationary expectations, liquidity, RBI, Repo Rate, reserve bank of india, REVERSE REPO, wholesale price index
Cost Inflation Index meaning and Index for all the years
Jun 1, 2009 Income Tax
What is Cost Inflation Index(CII)?
It is a measure of inflation that finds application in tax law, when computing long-term capital gains on sale of assets. Section 48 of the Income-Tax Act defines the index as what is notified by the Central Government every year, having regard to 75 per cent of average rise in the consumer price index (CPI) for urban non-manual employees for the immediately preceding previous year.
How does CII help in capital gains computation? Capital gain, as you know, arises when the net sale consideration of a capital asset is more than the cost. Since “cost of acquisition” is historical, the concept of indexed cost allows the taxpayer to factor in the impact of inflation on cost. Consequently, a lower amount of capital gains gets to be taxed than if historical cost had been considered in the computations.
Formula for computing indexed cost is (Index for the year of sale/ Index in the year of acquisition) x cost.
For example, if a property purchased in 1991-92 for Rs 20 lakh were to be sold in A.Y. 2009 -10 for Rs 80 lakh, indexed cost = (582/199) x 20 = Rs 58.49 lakh. And the long-term capital gains would be Rs 21.51, that is Rs 80 lakh minus Rs 58.49 lakh.
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Tags: acquisition, assets, capital asset, CAPITAL GAIN, consumer price index, Cost Inflation Index, gain, income tax act, index cost, index cpi, indexation, Inflation, inflation index, long term capital, section 48, tax, taxpayers
COST INFLATION INDEX FOR FINANCIAL YEAR 2008-09 IS 582
Aug 19, 2008 Income Tax
*SECTION 48, EXPLANATION (V) OF THE INCOME-TAX ACT, 1961 – NOTIFIED COST
INFLATION INDEX FOR FINANCIAL YEAR 2008-09***
*NOTIFICATION NO. 86/2008, DATED 13-8-2008*
In exercise of the powers conferred by clause (v) of the *Explanation* to section 48 of the Income-tax Act, 1961 (43 of 1961), the Central Government, having regard to seventy-five per cent of the average rise in the Consumer Price Index for the Financial Year commencing from the 1st day of April, 2007 and ending on the 31st day of March, 2008 for the urban non-manual employees, hereby specifies the Cost Inflation Index for the Financial Year commencing from the 1st day of April, 2008 and ending on the 31st day of March, 2009 and for that purpose further makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), Central Board of Direct Taxes number S.O.709(E), dated the 20th August, 1998, namely:-
In the said notification, in the Table, after serial number 27 and the entries relating, thereto, the following serial number and entries shall be inserted, namely 
“28
2008-09
582″
Tags: amendments, central, clauses, consumer price index, Cost Inflation Index, department, department of revenue, direct taxes, Finance, finance department, government of india, income tax act, income tax act 1961, indexation, Inflation, inflation index, ministry of finance, tax
Residential property and capital gains
Oct 30, 2007 Income Tax
When investors make profits on sale of assets like land, shares and mutual fund units, it is termed as capital gains. The investor has to pay tax on the resulting gains that is commonly referred to as capital gains tax. The amount of money outflow from your pocket depends on how long you held the property.
If a residential property is held by the seller for more than 36 months, it is considered a long-term investment. For investments over the short term, the short-term capital gain is added to your total income. You will be taxed depending on the tax bracket you fall in. When computing long-term capital gain, a bit more complexity is involved. Indexation is the process by which inflation is taken into account and the purchase price is proportionately increased. Consequently, the amount you end up paying as tax is reduced.
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Tags: CAPITAL GAIN, capital gains tax, gain, indexation, inflation index, long term capital gains, long term investment, NRI, profits, residential property, short term capital gain, term asset