Capital gains indexation determines inflation-adjusted acquisition and improvement costs, subject to post-transition exclusions and grandfathering for qualifying land transfers.

Indexed cost of acquisition and improvement are calculated by applying the relevant Cost Inflation Index ratio to the original acquisition or improvement cost. Long-term capital gains transfers on or after 23 July 2024 generally do not receive indexation. Resident individuals and Hindu undivided families transferring land or buildings acquired before that date may use the earlier indexed regime where it produces a lower tax liability. Indexation is unavailable for specified asset classes and transferors, including most bonds and debentures, depreciable assets, slump-sale undertakings, certain foreign-currency investments, market-linked debentures, and specified securities transfers.

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