Inflation Index

As per Notification no. So 1790(e)[no. 44/2017 (f. No. 370142/11/2017-tpl)], dated 5-6-2017, following table should be used for the Cost Inflation Index :-

Year	Value
2001-2002	100
2001-2002	100
2002-2003	105
2003-2004	109
2004-2005	113
2005-2006	117
2006-2007	122
2007-2008	129
2008-2009	137
2009-2010	148
2010-2011	167
2011-2012	184
2012-2013	200
2013-2014	220
2014-2015	240
2015-2016	254
2016-2017	264
2017-2018	272
2018-2019	280
2019-2020	289
2020-2021	301
2021-2022	317
2022-2023	331

For Cost Inflation Index upto Financial Year 2016-17

Year	Value
1981-1982	100
1981-1982	100
1982-1983	109
1983-1984	116
1984-1985	125
1985-1986	133
1986-1987	140
1987-1988	150
1988-1989	161
1989-1990	172
1990-1991	182
1991-1992	199
1992-1993	223
1993-1994	244
1994-1995	259
1995-1996	281
1996-1997	305
1997-1998	331
1998-1999	351
1999-2000	389
2000-2001	406
2001-2002	426
2002-2003	447
2003-2004	463
2004-2005	480
2005-2006	497
2006-2007	519
2007-2008	551
2008-2009	582
2009-2010	632
2010-2011	711
2011-2012	785
2012-2013	852
2013-2014	939
2014-2015	1024
2015-2016	1081
2016-2017	1125

* Source http://www.incometaxindia.gov.in/Pages/charts-and-tables.aspx

Value of Rs. 1 lakh can reduce to Rs. 97418 in one year

You work hard to earn your money. It help to meet your monthly expenses and the rest, you put away in a saving account for safekeeping. This way, you can easily access your money if you come across any unplanned expenses

Keeping some money aside is a good habit, but by keeping a substantially large sum in a saving account, you may be acctually loosing the value of your money (as illustrated in the picture). Why? Because it is getting eroded by inflation.....

Increase in prices i.e. inflation is responsible for reducing the value of the Rupee. For instance Rs.100 could have brought you movie tickets and popcorn for an entire family of four in the 1990's today for the same outing you may have to spend more then Rs.1000.

Plus depending on your income level, you have to pay tax on the intrest that you earn on your savings bank account which can further reduce your returns.

Therefore you need to look for investment avenues that help you fight inflation

Illustration



Your Savings + Intrest earned = Total



- Tax on Intrest - Impact of Inflation



= Value at End of 1 year





Int the above Illustration assuming Rs. 1 lakh in your saving account earned Rs. 3500 intrest(@3.5% p.a.) in 1 year. Total became RS. 103500
Tax on intrest is Rs. 1081.50 (@30.9%)
Impact of inflation is Rs.5000 (assumed at 5% p.a.)

net value at end of year =
savings + intrest - tax - inflation impact
= 100000 + 3500 - 1081.50 - 5000
= 97418

the above working are for illustration purpose only and are based on taxation laws as on FY 2010-11. Tax liability of 30.9% is callculated assuming individual investor falls in the top income tax slab of 30% & includes applicable cess. In case of individual nature of tax implications, investors are further advised to consult their tax advisor before making investments. Source for saving a/c intrest of 3.5% p.a. is www.rbi.org.in
Please not:Inflation rate of 5% p.a. is an internal assumption the acctual annual inflation rate and inflation index values are mentiond in "Inflation Index"