What is Indexation? — Meaning, Definition & Example
Definition
Indexation adjusts the purchase price of an asset for inflation using the Cost Inflation Index (CII) published by the government. It reduces taxable LTCG for debt funds (pre-April 2023 investments), property, and gold by accounting for inflation. Post-July 2024, property LTCG is 12.5% without indexation.
Property bought for ₹50 lakh in 2015 (CII 254) sold in 2024 (CII 363): Indexed cost = 50L × (363/254) = ₹71.46 lakh. If sold at ₹90 lakh, taxable gain = ₹18.54 lakh instead of ₹40 lakh.
🇮🇳 Indexation in Hindi / हिंदी में
इंडेक्सेशन — इंडेक्सेशन सरकार द्वारा प्रकाशित कॉस्ट इन्फ्लेशन इंडेक्स (CII) का उपयोग करके किसी संपत्ति की खरीद मूल्य को मुद्रास्फीति के लिए समायोजित करता है।
Indexation (Hinglish) — Indexation ek method hai jisme Cost Inflation Index (CII) use karke asset ka purchase price inflation ke hisaab se adjust kiya jaata hai. Isse taxable LTCG kam ho jaata hai.