CBDT notifies Cost Inflation Index at 384 for FY 2026-27; here's what taxpayers should know

The Central Board of Direct Taxes (CBDT) has notified the Cost Inflation Index (CII) at 384 for FY 2026-27 through Notification No. 85/2026.

Announcing the update on its official X handle, the tax department said: "Kind Attention Taxpayers! CBDT notifies the Cost Inflation Index (CII) for FY 2026-2027 vide Notification No. 85/2026. The Cost Inflation Index for FY 2026-27 relevant to tax year 2026-27 is 384."

The notification, issued under Section 72(8)(a) of the Income-tax Act, 2025, states that the new Cost Inflation Index will apply to Tax Year 2026-27 and subsequent tax years, with effect from April 1, 2026.

What is the Cost Inflation Index?

The Cost Inflation Index (CII) is a measure notified by the government to account for inflation while calculating the cost of acquiring certain long-term capital assets.

Inflation pushes up the prices of goods and assets over time, which also affects the value of an investment. The Cost Inflation Index adjusts the purchase price of an eligible asset for inflation so that taxpayers are taxed on the actual gain they have made, rather than the increase in value caused by rising prices alone.

How does it work?

Where indexation is available under the tax law, the purchase price is adjusted using the Cost Inflation Index to arrive at the indexed cost of acquisition.

Will the new CII benefit all taxpayers?

Not necessarily. While the government continues to notify the Cost Inflation Index every year, indexation benefits are no longer available in all cases following changes introduced in recent years.

As a result, the newly notified CII of 384 will primarily be relevant to taxpayers and transactions for which indexation continues to be permitted under the Income-tax Act.