Rule 269 of the Income-tax Rules, 2026

Where this rule sits

Rule 269 gives effect to Section 533 of the Income-tax Act, 2025. A rule cannot go beyond the section it serves: where the two seem to differ, the section governs.

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What this rule does

Rule 269 prescribes three rounding conventions that apply in calculating interest payable by the assessee, or interest payable by the Central Government to the assessee, under any provision of the Act.

Clause (a) governs the period where interest is calculated on an annual basis: the period is rounded off to a whole month or months, any fraction of a month is ignored, and the period so rounded off is deemed to be the period in respect of which the interest is to be calculated.

Clause (b) governs the period where interest is calculated for every month or part of a month comprised in a period: any fraction of a month is deemed to be a full month and the interest is calculated accordingly.

Clause (c) governs the base: the amount of tax, penalty or other sum on which the interest is calculated is rounded off to the nearest multiple of Rs. 100, any fraction of Rs. 100 is ignored, and the amount so rounded off is deemed to be the amount in respect of which the interest is to be calculated.

Why it is there

Interest under the Act is charged and paid under many different provisions, and each of them would otherwise raise the same three questions — what to do with a part month, whether the answer differs when the provision itself says "month or part of a month", and how to treat the odd rupees in the principal. The rule answers all three once, for every interest provision in the Act, so that two officers computing the same interest reach the same figure.

Who it applies to

• An assessee liable to pay interest under any provision of the Act
• An assessee entitled to interest payable by the Central Government
• Any person computing interest under the Act

The figures, and what each one turns on

What this means in practice

Clauses (a) and (b) pull in opposite directions and the reader has to know which provision he is under before applying either. Where the interest is on an annual basis a part month is ignored, which shortens the period; where the provision runs for every month or part of a month a part month is treated as a whole one, which lengthens it. Applying clause (b) to an annual-basis computation overstates the interest, and applying clause (a) to a month-or-part-of-a-month provision understates it. Clause (c) works on the base rather than the period, and it always works downwards — the fraction of Rs. 100 is ignored, not rounded to the nearer hundred, despite the phrase "nearest multiple". The rule is even-handed as to direction of payment: it applies to interest payable by the assessee and to interest the Central Government pays the assessee. It fixes no rate and no period of charge; those come from the interest provision itself.

An example

Interest is to be calculated on a sum of Rs 2,47,860 for a period of four months and eleven days under a provision framed for every month or part of a month. Clause (c) reduces the base to Rs 2,47,800, the fraction of Rs 100 being ignored. Clause (b) treats the eleven days as a full month, so interest runs for five months. Had the provision instead been on an annual basis, clause (a) would have ignored the eleven days and the period would have been four months.

Where you meet this rule

A reader meets it inside any interest computation in an assessment, an intimation, a demand notice or a refund order — it is not a rule anyone applies on its own, but it decides the last figure of almost every interest calculation under the Act.

The words themselves

What people get wrong

• Treating a part month as a full month in every case. That is clause (b), for interest calculated for every month or part of a month; clause (a) ignores a fraction of a month where interest is on an annual basis.
• Rounding the base up to the nearer hundred. Clause (c) ignores any fraction of Rs. 100, so the rounding is always downwards.
• Rounding the interest itself. Clause (c) rounds the amount of tax, penalty or other sum in respect of which the interest is calculated, not the interest figure.
• Assuming the rule applies only to interest the assessee pays. It applies equally to interest payable by the Central Government to the assessee.