CBDT Estimates Cost Inflation Index For 2007-08 At 551

New Delhi: The Central Board of Direct Taxes (CBDT) has estimated the cost inflation index for the financial year 2007-08 at ''551''. The cost inflation index defined by the Income-Tax Department is useful for income-tax assesses in the computation of tax on long-term capital gains. For the financial year 2006-07 and 2005-06, the Finance Ministry had estimated the cost inflation index at ''519'' and ''497'' respectively. Tax experts feel that the CBDT has adequately factored in the increases in inflation while deciding on the cost inflation index for 2007-08. The increase in inflation has been duly reflected in the cost inflation index specified for 2007-08. Currently, the income-tax law permits long-term capital gains to be computed after adjusting for inflation. The cost of acquisition as well as the cost of improvement is adjusted for inflation between the date of purchases and date of sale before the long-term capital gain is ascertained.