Computation of capital gains: deduction of transfer costs and indexed acquisition/improvement values governs taxable gain calculation. Capital gains are computed by deducting transfer-related expenditure and the cost of acquisition and improvement from the full value of consideration, with substitution of 'indexed cost of acquisition' and 'indexed cost of any improvement' where indexing applies; certain deductions are disallowed. Unit holder receipts not treated as income reduce unit cost. Specified entities may claim prescribed additional deductions attributable to transfers to specified persons. Non-residents compute gains on Indian company shares or debentures by converting acquisition cost, transfer expenditure and consideration into the original purchase foreign currency and reconverting gains into Indian currency, while rupee appreciation on redemption of rupee bonds is ignored. Cost Inflation Index and indexed cost definitions and prescribed exchange rates are provided.