Indexation is a process that adjusts the cost of purchase as per the inflation (index number) which the government releases every year.
For eg:
If you purchased a unit at ₹100 in 2012-13 and sold the unit at ₹ 150 in 2018-19. The cost inflation index is 200 for 2012-13 and 280 for 2018-19 respectively.
Then the indexed cost of acquisition is (100*280)/200 i.e. ₹140.
When mentioning 'tax rates post indexation' your taxable profits are calculated above the indexation value. I.e. following the above example the taxable profit will be for the ₹10 difference (150-140) & not the original amount (150-100 = 50).
