The Central Board of Direct Taxes (CBDT) has pegged the cost inflation index for the financial year 2006-07 at `519'. This index is useful for income-tax assessees in the computation of tax on long-term capital gains (for indexation purposes). The income-tax law requires the CBDT to specify the cost inflation index for a financial year after factoring in a 75 per cent of average rise in consumer price index for urban non-manual employees for the immediately preceding previous year.
For the financial year 2005-06 and 2004-05, the Finance Ministry had pegged the cost inflation index at `497' and `480' respectively. The base year for the cost inflation index is 1981-82 (100).