CBDT Announces Cost Inflation Index for Financial Year 2026-27
The Central Board of Direct Taxes (CBDT) has issued Notification No. 85/2026 dated 15 July 2026, notifying the Cost Inflation Index (CII) for Financial Year 2026-27 as 384 under the provisions of the Income-tax Act, 2025.
The notified Cost Inflation Index will apply from 1 April 2026 for Tax Year 2026-27 and the subsequent tax years wherever applicable.
What is the Cost Inflation Index (CII)?
The Cost Inflation Index is a government-notified index used to adjust the purchase cost of certain capital assets for inflation. Where the Income-tax Act permits indexation, it helps determine the inflation-adjusted cost of acquisition while computing capital gains.
CBDT notifies the CII for each financial year through an official notification.
Cost Inflation Index for FY 2026-27
| Financial Year | Cost Inflation Index (CII) |
| 2026-27 | 384 |
Why is this Notification Important?
The notified CII is relevant for taxpayers and professionals while calculating capital gains in cases where indexation benefit is available under the Income-tax Act.
The index is commonly referred to while:
- Computing indexed cost of acquisition.
- Computing indexed cost of improvement, where applicable.
- Advising taxpayers on capital gains taxation.
- Preparing and reviewing Income Tax Returns involving eligible capital assets.
The actual availability of indexation depends on the applicable provisions of the Income-tax Act for the relevant asset and transaction.
Effective Date
- Notification Number: 85/2026
- Date of Notification: 15 July 2026
- Cost Inflation Index (FY 2026-27): 384
- Applicable From: Tax Year 2026-27 (effective from 1 April 2026) and subsequent tax years.
Conclusion
The notification provides certainty regarding the Cost Inflation Index for FY 2026-27. Taxpayers, Chartered Accountants, and tax professionals should use the notified CII while computing capital gains in cases where indexation is applicable under the Income-tax Act.
Official Notification
CBDT Notification No. 85/2026 dated 15 July 2026 – Cost Inflation Index for Financial Year 2026-27.
Official PDF: https://www.incometaxindia.gov.in/documents/d/guest/notification-no-85-2026-pdf
