Section 516 Income Tax Act 2025: How Is Income Tax Rounded Off?

Q: Is Rs. 1,23,455 rounded up or down?

It is rounded up to Rs. 1,23,460 because the last rupee digit is five.

Q: Are paise considered when rounding under Section 516?

No. The paise component is first ignored before applying rounding to the nearest multiple of Rs. 10.

Q: Which earlier sections correspond to Section 516?

Sections 288A and 288B of the Income-tax Act, 1961 covered rounding of total income and payable or refundable amounts respectively.

Section 516 of the Income-tax Act, 2025 sets out a single rule for rounding total income and amounts payable or refundable under the Act to the nearest multiple of Rs. 10. The rule helps ensure consistent figures in tax computation, payment and refund processing.

Legal position: Section 516, titled "Rounding off of amount of total income, or amount payable or refundable", applies under the Income-tax Act, 2025, in force from 1 April 2026. It brings together the subjects of Sections 288A and 288B of the Income-tax Act, 1961.

1. What does Section 516 provide?

Section 516 directs that the total income computed, or any amount payable or refundable, under the Income-tax Act, 2025 shall be rounded to the nearest multiple of Rs. 10. The rounding is carried out in two stages: disregard paise, and then examine the last digit of the whole-rupee amount.

If the last rupee digit is 5, 6, 7, 8 or 9, increase the amount to the next higher multiple of ten. If the last rupee digit is 0, 1, 2, 3 or 4, reduce it to the lower multiple of ten (or leave it unchanged when already a multiple of ten). The rounded figure is deemed to be the relevant total income or payable or refundable amount under the Act.

2. How to round income, tax payable or refunds

Identify the amount computed under the applicable provisions of the Act.
Ignore the paise, without first rounding the paise up to the next rupee.
Check the units digit of the remaining whole-rupee amount.
If the units digit is 5 or greater, round upward to the next multiple of Rs. 10.
If the units digit is less than 5, round downward to the preceding multiple of Rs. 10.
Use the rounded amount for the statutory purpose to which Section 516 applies.

Key distinction: The rule is not ordinary rounding to the nearest rupee. Paise are dropped first. For example, Rs. 104.99 becomes Rs. 100 under Section 516, not Rs. 110.

3. Worked examples of rounding under Section 516

Original amount	After ignoring paise	Rounded amount
Rs. 1,23,454.99	Rs. 1,23,454	Rs. 1,23,450
Rs. 1,23,455.01	Rs. 1,23,455	Rs. 1,23,460
Rs. 8,749.75	Rs. 8,749	Rs. 8,750
Rs. 2,004.99	Rs. 2,004	Rs. 2,000
Rs. 12,340.75	Rs. 12,340	Rs. 12,340

4. Does the rule apply to both tax payments and refunds?

Yes. The text expressly covers total income computed as well as any amount payable or refundable under the Act. Accordingly, the statutory rounding principle is not confined to the taxable-income figure. It also applies to amounts due and refunds, as relevant to the computation under the Act.

Section 516 does not itself prescribe tax rates, deductions, exemptions, or the procedure for claiming refunds. Those questions are governed by other applicable provisions.

5. Relevant statutory terms

Total income: Income arrived at after applying the relevant charging, computation, exemption and deduction provisions of the Act, before applying the rounding rule to the computed total.

Amount payable: An amount due under the Act, such as a tax-related liability determined under applicable provisions, to which Section 516 applies.

Amount refundable: An amount refundable under the Act following the applicable computation and refund provisions.

Nearest multiple of Rs. 10: The whole-rupee figure ending in zero, determined by the specific statutory steps in Section 516.

These explanations describe how the expressions operate in Section 516 and do not replace any formal definition elsewhere in the Act.

6. Comparison with the Income-tax Act, 1961

Under the earlier law, Section 288A addressed rounding of total income, while Section 288B addressed rounding of amounts payable and refunds due. Section 516 of the Income-tax Act, 2025 consolidates these two subjects into a single provision while retaining the basic nearest-Rs.-10 method.

The applicable law for an earlier tax period must be determined under the relevant commencement and transition provisions; the enactment of the 2025 Act does not by itself mean that all earlier assessments are governed by Section 516.

7. Practical points for taxpayers and professionals

Complete the relevant income and tax calculations before applying statutory rounding at the required stage.
Do not round paise up to a whole rupee before applying the Rs. 10 rule.
Distinguish the rounded total-income figure from the rounded tax payable or refundable figure.
Where an e-filing utility or official computation displays a different result, review the calculation and applicable tax-year rules rather than manually changing filed figures without verification.

8. Frequently asked questions

Does Section 516 apply to both total income and tax refunds?

Yes. It applies to total income computed and amounts payable or refundable under the Income-tax Act, 2025.

Is Rs. 1,23,455 rounded up or down?

It is rounded upward to Rs. 1,23,460 because the last digit is five.

Are paise considered when rounding under Section 516?

No. Paise are ignored before the whole-rupee amount is rounded to the nearest Rs. 10.

Which earlier sections correspond to Section 516?

Sections 288A and 288B of the Income-tax Act, 1961 dealt with rounding of total income and of amounts payable or refundable, respectively.

9. Official statutory references

Official Income-tax Act 2025 Income Tax Department - Act and Rules

Updated: 12 November 2026. This article provides general statutory information. Consult the Act, applicable rules and official computation guidance for specific cases.