The cost inflation index (CII) for the financial year (FY) 2020-21 has been notified by the Ministry of Finance. In a notification dated June 12, the finance ministry stated that CII for FY 2020-21 has been set as 301. For the previous financial year, CII was 289.
CII number is important as it is used to arrive at the inflation-adjusted purchasing price of assets and thereby long-term capital gains (LTCG). It is also important to compute the long-term capital gains/long-term capital losses (LTCL) on the assets which have been or are planned to be sold in FY 2020-21.
There are two things that people must keep in mind relating to the cost inflation index.
Firstly, his number would be utilized to compute inflation-adjusted cost only for those assets where inflation-adjusted (indexation benefit) is permitted. Thus, the CII value could not be used to reach LTCG/LTCL on equity mutual funds.
Secondly, this CII number would be necessary to compute LTCG for Financial Year 2020-21. The taxes on these gains would be paid by you while filing your income tax returns (ITR) for Financial Year 2020-21 (AY 2021-22), that is, next year.
The table below shows the CII of the last 5 years:
| Financial Year | CII Number |
| 2020-2021 | 301 |
| 2019-2020 | 289 |
| 2018-2019 | 280 |
| 2017-2018 | 272 |
| 2016-2017 | 264 |
