Q. Consider the following statements regarding the Cost Inflation Index (CII):
1. It calculates the increase in the price of goods due to inflation monthly.
2. The Central Board of Direct Taxes (CBDT) is responsible for notifying the CII every year.
Which of the statements given above is/are correct?
Answer: B
Notes:
As inflation increases, the prices of goods increase too. Due to this, the purchasing power of money falls. Cost Inflation Index (CII) is a tool used in the calculation of an estimated yearly increase in an asset’s price as a result of inflation.
The Central Government fixes this index and publishes it in its official gazette for measuring inflation. This index, notified each year by the CBDT is mandated under Section 48 of the Income Tax Act, 1961.
CII has a base year concept, currently the base year is 2001 having CII of 100. CII for 2020-21 has been notified at 301.
Source: ForumIAS
