Tax
Indexation
Adjusting an asset's purchase price for inflation to reduce the taxable capital gain.
Indexation inflates your original cost using an official index, so you are taxed only on real gains, not inflation.
It historically applied to debt funds, property, and gold, cutting the taxable profit meaningfully.
Recent rules have removed or changed indexation for several assets, so always check the current treatment before selling.
For example
Property bought for ₹20L years ago might have an indexed cost of ₹32L, so a ₹40L sale is taxed on ₹8L gain, not ₹20L.