Look,capital gain is computed by deducting the cost of acquisition from the sale proceeds of the asset.If the asset is purchased/constructed by the assessee (your father in your case) before 01.04.1981,then instead of taking the actual cost as cost of acquisition,you may take the fair market value on 01.04.1981 as the cost.This may make the cost of acquisition higher and so capital gain will be lower.The cost inflation index for 1981-82 is 100 and that for 2005-06 is 497.If the house was aquired by your father after 1981-82 or if any of you have made any improvement after 01.04.1981,you will need the cost inflation index of that year when the house was acquired by your father or when the improvements were made,as well to act as denominator.The following are the cost inflation index notified by the government. 1981-82 100
1982-83 109
1983-84 116
1984-85 125
1985-86 133
1986-87 140
1987-88 150
1988-89 161
1989-90 172
1990-91 182
1991-92 199
1992-93 223
1993-94 244
1994-95 259
1995-96 281
1996-97 305
1997-98 331
1998-99 351
1999-2000 389
2000-2001 406
2001-2002 426
2002-2003 447
2003-2004 463
2004-2005 480
2005-2006 497 The index after this is not known so far.Can be checked once it is notified.Or you may ask on this very forum after some more time.
