To avoid difficulty in calculation of taxable amount and to facilitate easy of payment of tax liability, the Income Tax act provides provisions of rounding off of taxable income as well final tax liability which is given under section 288A and 288B.

As per section 288A of the Income Tax Act, the total income computed as per various sections of this act, shall be rounded off to the nearest Rs 10. For the purpose of rounding off, firstly any part of rupee consisting of paise should be ignored. Thereafter, if the last digit in the total figure is 5 or greater than 5, the total amount should be increased to the next higher amount which is a multiple of Rs. 10. This means, If total income is Rs. 12,98,464.50 then it should be rounded off to Rs. 12,98,460.

If the last digit in the total figure is less than 5, the total amount should be reduced to the nearest lower amount which is a multiple of Rs 10. This rounding off of income should be done only to the total income and not at the time of computation of income under the various heads. This says, if total income is Rs. 12,98,465.50 then it should be rounded off to Rs. 12,98,470.

As per Section 288B of the income tax act, the total tax computed shall be rounded off to the nearest Rs 10. The rounding off of tax would be done on the total tax payable or refundable and not to various different sub-heads of taxes like income tax, education cess, surcharge etc. Rounding off would be done in the same manner as explained above u/s 288A i.e. firstly paise would be ignored and thereafter if the last digit in the total figure is 5 or greater than 5, the total amount should be increased to the next higher amount which is a multiple of Rs. 10. So, if tax liability comes to amount of Rs. 2,98,464.50 then it should be rounded off to Rs. 2,98,460 while a tax liability amount of Rs. 2,98,465.50 should be rounded off to Rs. 2,98,470.

Know what is rounding off in Income Tax u/s 288A & 288B

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