Advance Tax for FY 25-26 Due Date soon, Missing CII Could Trigger Capital Gain Tax Issues
Advance Tax for FY 25-26 Due Date soon, Missing CII Could Trigger Capital Gain Tax Issues
The deadline for the first installment of advance tax for the financial year 2025–26 is approaching on 15th June 2025. However, numerous taxpayers and tax professionals are facing an unusual issue this year> The issue is that, the Cost Inflation Index (CII) for FY 2025–26 has not yet been notified by the Income Tax Department.
The Cost Inflation Index (CII) is a number given by the government to indicate how much prices have increased over time due to inflation. It assists individuals in adjusting the original cost of something they bought, such as land, a house, or gold, when they sell it after many years. This is essential because the value of money changes over time due to inflation, for instance value of Rs. 1 lakh, ten years ago, will not be the same as Rs. 1 lakh today. So, when you sell an asset and calculate your profit, the CII helps you increase the old purchase price to match today’s value. This way, your actual profit looks smaller, and you end up paying less tax on it. The government announces the CII number every financial year, and it is mostly used while calculating long-term capital gains tax.
The Finance Minister in Finance Act (2) 2024 took away the indexation benefit for long-term capital gains incurred after 22nd July 2024, reducing long term Capital Gain tax from 20% to 12.5%. However, inthe case of sale of immovable property, purchased before 23rd July 2024, a resident taxpayer can still claim the indexation benefit.
In the absence of Cost Inflation Index, it is not possible to calculate the capital gain from the sale of property in the correct manner.