by Under the Income-tax Act, 2025, Section 516 provides for the rounding off of total income for the purpose of determining the amount on which income tax is calculated. After computing the total income of an assessee in accordance with the provisions of the Act, the amount is rounded off to the nearest multiple of ₹100. This provision ensures uniformity and simplifies the calculation and collection of tax.
The rule operates on the total income determined after considering the applicable provisions, including eligible deductions and adjustments. If the last two digits of the total income are less than ₹50, those digits are ignored and the amount is rounded down to the nearest hundred. If the last two digits are ₹50 or more, the amount is rounded up to the next multiple of ₹100.
For example, if the total income is ₹7,45,430, the last two digits are ₹30. Therefore, it will be rounded down to ₹7,45,400. If the total income is ₹7,45,570, the last two digits are ₹70. Therefore, it will be rounded up to ₹45,600.
The rounding provision applies to the total income, not merely to individual items of income. It helps in arriving at a standard figure for calculating the tax liability. Rounding off does not change the actual income earned by the assessee; it only affects the figure used for tax computation.
Thus, Section 516 ensures that the total income is rounded to the nearest ₹100 before determining the tax payable, making tax computation simpler and consistent.
