The Cost Inflation Index (CII) is used to estimate the increase in the prices of goods and assets year-by-year due to inflation. The Cost Inflation Index (CII) was first introduced in the year of 1981, but the base year was changed to 2001 due to difficulties faced by tax payer in valuing assets purchased before 1981. Now, the cost of acquisition of an asset acquired before 01.04.2001 shall be taken as fair market value as on 1st April, 2001 and the cost of improvement shall include only those capital expenses which are incurred after 01.04.2001.
The CII is a factor used to adjust the original purchase price of a capital asset to account for inflation. By applying the concept of CII, taxpayers can reduce the calculated long-term capital gain, ultimately leading to a lower tax liability.
Income tax department has notified the cost inflation index under section 48, explanation (v), (notification 44/2024, dated 24-05-2024).
The following table should be used for the cost inflation index :-
| Sl. No. | Financial Year | Cost Inflation Index |
| 1 | 2001-02 | 100 |
| 2 | 2002-03 | 105 |
| 3 | 2003-04 | 109 |
| 4 | 2004-05 | 113 |
| 5 | 2005-06 | 117 |
| 6 | 2006-07 | 122 |
| 7 | 2007-08 | 129 |
| 8 | 2008-09 | 137 |
| 9 | 2009-10 | 148 |
| 10 | 2010-11 | 167 |
| 11 | 2011-12 | 184 |
| 12 | 2012-13 | 200 |
| 13 | 2013-14 | 220 |
| 14 | 2014-15 | 240 |
| 15 | 2015-16 | 254 |
| 16 | 2016-17 | 264 |
| 17 | 2017-18 | 272 |
| 18 | 2018-19 | 280 |
| 19 | 2019-20 | 289 |
| 20 | 2020-21 | 301 |
| 21 | 2021-22 | 317 |
| 22 | 2022-23 | 331 |
| 23 | 2023-24 | 348 |
| 24 | 2024-25 | 363 |