Rounding off of amount of total income, or tax payable or refundable
[As per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
The amount of total income computed or any amount payable or refundable under this Act, shall be rounded off to the nearest multiple of ten rupees ignoring any part of a rupee consisting of paise and thereafter if such amount is not a multiple of ten, then—
- (a) such amount shall be increased to the next higher amount which is a multiple of ten, if the last figure in that amount is five or more; or
- (b) such amount shall be reduced to the next lower amount which is a multiple of ten, if the last figure is less than five,
and the amount so rounded off shall be deemed to be the total income of the assessee or the amount payable and refund due, under this Act.
FAQs on Section 516 of the Income Tax Act 2025
FAQs for Income Tax Act 2025 – Section 516 for Tax Year 2025-26 (Rounding Off of Income, Tax Payable, or Refundable):
What is Section 516 of the Income Tax Act, 2025?
Section 516 specifies the rounding-off rules for total income, tax payable, or refund due under the Income Tax Act, 2025.
From when does Section 516 apply?
This provision is effective from April 1, 2026, for the tax year 2025-26.
Why is rounding off necessary in income tax calculations?
Rounding off simplifies tax computations, avoids small discrepancies, and ensures uniformity in tax assessments.
How is total income rounded off under Section 516?
The total income is rounded to the nearest multiple of ₹10 by following these rules:
- If the last digit is 5 or more, round up to the next multiple of 10.
- If the last digit is less than 5, round down to the previous multiple of 10.
How is tax payable or refundable rounded off?
The tax payable or refund due follows the same rounding rules as total income.
What happens to the paise in income tax calculations?
Any amount in paise is ignored, and rounding off is done only on whole rupees.
What happens if the total income is ₹45,234?
The last digit is 4 (less than 5), so it is rounded down to ₹45,230.
What if the tax payable is ₹7,298?
The last digit is 8 (5 or more), so it is rounded up to ₹7,300.
If the refund due is ₹1,532.49, what will be the final amount?
- Paise are ignored → ₹1,532
- The last digit is 2 (less than 5), so it is rounded down to ₹1,530.
If the total income is ₹89,995, how is it rounded?
The last digit is 5 (5 or more), so it is rounded up to ₹90,000.
Does Section 516 apply to all types of taxpayers?
Yes, these rounding rules apply to all individuals, businesses, and other taxable entities.
Is there any exemption from rounding off?
No, rounding off is mandatory for all taxpayers as per the law.
What if a taxpayer does not round off the income correctly?
The Income Tax Department will apply rounding-off rules while finalizing the tax assessment.
Does rounding off impact tax deductions or exemptions?
No, deductions and exemptions are calculated as per normal tax provisions before rounding off the total income.
Section 516 of the Income Tax Act, 2025, effective from April 1, 2026, mandates rounding off total income, tax payable, or refund due to the nearest multiple of ₹10. Any paise are ignored, and if the last digit of the amount is 5 or more, it is rounded up to the next multiple of 10; if less than 5, it is rounded down.
This rule applies uniformly to all taxpayers to simplify tax computations and ensure consistency. The Income Tax Department will enforce this rounding-off while assessing tax liabilities, but it does not impact deductions or exemptions before final computation.
