• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

K.R. Srivats

New Delhi, Aug. 6 The Central Board of Direct Taxes (CBDT) has pegged the cost inflation index for the financial year 2007-08 at ‘551’. The cost inflation index specified by the Income-Tax Department is useful for income-tax assesses in the computation of tax on long-term capital gains (for indexation purposes).

For the financial year 2006-07 and 2005-06, the Finance Ministry had pegged the cost inflation index at ‘519’ and ‘497’ respectively. The base year for the cost inflation index is 1981-82 (100).

Tax experts feel that the CBDT has adequately factored in the rise in inflation while deciding on the cost inflation index for 2007-08. “The increase in inflation has been duly reflected in the cost inflation index specified for 2007-08,” Mr Aseem Chawla, Partner, Amarchand & Mangaldas told Business Line.

Currently, the income-tax law allows long-term capital gains to be computed after adjusting for inflation.

The cost of acquisition as well as the cost of improvement is adjusted for inflation between the date of purchases and date of sale (through the cost inflation index) before the long-term capital gain is ascertained.

The income-tax law requires the CBDT to specify the cost inflation index for a financial year after factoring in a 75 per cent of average rise in consumer price index for urban non-manual employees for the immediately preceding previous year.

More Stories on : Income Tax | Economy

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Bay storm crosses coast, two more in offing

Copyright © 2007, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line