With reference to the cost inflation index (CII), consider the following statements:1. It is an index that is used to calculate the inflation-adjusted rise in the value of an asset.2. The Cost Inflation Index for FY 2022-23 relevant to AY 2023-24 is 331.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?

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With reference to the cost inflation index (CII), consider the following statements:

1. It is an index that is used to calculate the inflation-adjusted rise in the value of an asset.

2. The Cost Inflation Index for FY 2022-23 relevant to AY 2023-24 is 331.

Which of the statements given above is/are correct?

a)
1 only
b)
2 only
c)
Both 1 and 2
d)
Neither 1 nor 2

Correct answer is option 'C'. Can you explain this answer?

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Daily Current Affairs MCQ- June 18, 2022

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With reference to the cost inflation index (CII), consider the followi...

The Central Board of Direct Taxes (CBDT) notified the cost inflation index (CII) for FY 2022-23 via a notification dated June 14, 2022. The Cost Inflation Index for FY 2022-23 relevant to AY 2023-24 is 331. For the previous year, i.e., FY 2021-22, CII was notified as 317.

The CII is an index that is used to calculate the inflation-adjusted rise in the value of an asset including land, buildings, houses, gold jewellery, debt mutual funds, and so on.
This CII number will assist you determine the long-term capital gains on which you are required to pay taxes when you file your income tax returns (ITR) next year.
This number will be used to calculate inflation-adjusted cost for only those assets that allow for inflation-adjusted (indexation benefit). As a result, the CII value cannot be used to calculate LTCG/LTCL on equity mutual funds because any sum above Rs 1 lakh each fiscal year is taxed at a flat rate of 10% without the advantage of indexation.

How it is calculated

The formula to calculate inflation-adjusted cost price is: (CII of the year of sale/CII for the year of purchase) * Actual cost price.
The government declared in Budget 2017 that the base year would be changed from 1981 to 2001 due to challenges in obtaining appropriate information by taxpayers. In the case of an asset purchased prior to April 1, 2001, the cost of the asset is regarded as the fair market value on April 1, 2001.

Hence both statements are correct.

Answered by Notes Wala · View profile

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With reference to the cost inflation index (CII), consider the following statements:1. It is an index that is used to calculate the inflation-adjusted rise in the value of an asset.2. The Cost Inflation Index for FY 2022-23 relevant to AY 2023-24 is 331.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?

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