Section 516 — Rounding off of amount of total income, or amount payable or refundable. Successor to s.288A, s.288B of the 1961 Act.
Section 516 is in Chapter XXIII — Miscellaneous, which runs from section 499 to section 536.
The section rounds off three things: the amount of total income computed, and any amount payable or refundable under the Act. Each is rounded to the nearest multiple of Rs. 10, ignoring first any part of a rupee consisting of paise. If the resulting amount is not a multiple of ten, it is then increased to the next higher multiple of ten under clause (a) where the last figure is five or more, or reduced to the next lower multiple of ten under clause (b) where the last figure is less than five. The amount so rounded off is deemed to be the total income of the assessee, or the amount payable or refundable, as the case may be, under the Act.
Tax computations produce figures in rupees and paise, and every threshold, rate and comparison in the Act would otherwise have to work on them. The section removes that by rounding to the nearest ten and, importantly, by deeming the rounded figure to be the amount for the purposes of the Act, so the rounded number is the operative one rather than a presentational convenience.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Rounding unit | The nearest multiple of Rs. 10 | Applied to total income computed and to any amount payable or refundable under the Act, after ignoring any part of a rupee consisting of paise | Section 516 |
| Rounding up | To the next higher multiple of ten | Where the last figure in the amount is five or more | Clause (a) |
| Rounding down | To the next lower multiple of ten | Where the last figure is less than five | Clause (b) |
There are two steps and they run in order: paise are ignored first, and only then is the rupee figure moved to a multiple of ten. The test in clauses (a) and (b) is on the last figure of that rupee amount, so it is the units digit that decides, not the discarded paise. The closing words matter more than the arithmetic — the rounded amount is deemed to be the total income, or the amount payable or refundable, so a threshold expressed elsewhere in the Act is compared against the rounded figure. The section covers total income computed as well as amounts payable and refundable, so both sides of an assessment are rounded.
A computation produces a total income of Rs 8,45,674.60. The paise are ignored, leaving Rs 8,45,674; the last figure is four, which is less than five, so under clause (b) the amount becomes Rs 8,45,670, and that figure is deemed to be the total income under the Act. Had the figure been Rs 8,45,675.20, the last figure would be five and clause (a) would take it up to Rs 8,45,680.
On the face of a return, an intimation, an assessment order and a refund order, where the total income and the tax payable or refundable always end in a zero. It is the reason a computed figure and the figure carried into the order differ by a few rupees.
shall be rounded off to the nearest multiple of Rs. 10 ignoring any part of a rupee consisting of paise
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
the amount so rounded off shall be deemed to be the total income of the assessee or the amount payable or refundable
See the full 1961 to 2025 concordance.
See every circular and notification on this section, or the circulars index.
