Calculating the indexation value of Land


Can anyone help in determining the indexation value of a plot of land purchased in the year 1992. Want to calculate the buying price adjusted with the cost inflation index for the FY 2023-2024.

Buying Price in the year 1992 – Rs 74,000

As far as I know, the formula is to take into account the CII of the current year(for 2022-23 is 331) in which the land is sold divided by the CII of 2000-01 (i.e 100) and this ratio is multiplied with the original buying price.
331/100 * 74000 = Rs 2,44,940

But do we not take 8 years from 1992-2000 and adjust that as well, somehow?

Hi @Sudhanshu_Joshi

Under the Finance Act 2017, the government shifted the base year from 1981 to 2001 for an easier and more accurate valuation.

For property purchased before 2001, the acquisition cost cannot be higher than the fair market value as on April 1, 2001, or your actual acquisition cost.

So, the calculation shall be as follows:
CII for for FY 2022-23 = 331 & for FY 2001-2 = 100
Indexed Cost of Acquisition = Fair Market Value as of 2001 * (CII for the year of sale / CII for the year of purchase)

Then, for the purpose of capital gains, it is calculated as sale consideration less indexed cost of acquisition.

Read more about Cost Inflation Index : CII Income Tax - Learn by Quicko


apologies i was wrong deleting my earlier post so as to not confuse others quicko is the expert

1 Like

Thanks for the reply @Quicko
I understand this, however can you please let me know how would we calculate the fair market value of the plot of land in 2001. Will it be the circle rate that was prevailing for that area in 2001? Or should I just compound the buying price of the land by an average of 6% and assume it to be the Fair Market Value in 2001. Also, if you could redirect me to any standard practices that are involved during computation of P&L on the sale of immovable property, that would be really helpful.

Thanks Again

Hi @Sudhanshu_Joshi

The fair market value of the plot in 2001 can be estimated with the help of a real estate valuation analyst or by using the circle rate for that area in 2001.