Chapter XXIII - Miscellaneous
Section 516
Section 516: rounding off amounts under the Act
Section 516 is a simple computational rule: any amount of total income computed under the Act, and any amount payable or refundable under it, must be rounded off to the nearest multiple of ₹10.
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This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
The amount of total income computed or any amount payable or refundable under this Act, shall be rounded off to the nearest multiple of ₹ 10 ignoring any part of a rupee consisting of paise and thereafter if such amount is not a multiple of ten, then—
(a) 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; or
(b) such amount shall be reduced to the next lower amount which is a multiple of ten, if the last figure is less than five,
and the amount so rounded off shall be deemed to be the total income of the assessee or the amount payable or refundable, as the case may be, under this Act.
Introduction
Section 516 applies a single rounding rule to computed total income and amounts payable or refundable under the Act. First disregard paise; then round the whole-rupee amount to the nearest multiple of ten using the last digit.
This is a computation rule for the final statutory amount. It does not change the underlying entries or turn every component of a calculation into a separately rounded figure.
Key takeaways
Which amounts
Computed total income, as well as amounts payable or refundable under the Act, are covered.
Order matters
Ignore paise first; then use the last digit of the whole-rupee amount to round to a multiple of ₹10.
Five rounds up
A last digit of five or more goes to the higher multiple of ten; a last digit below five goes to the lower one.
How the rounding works
The amount of total income computed, or any amount payable or refundable under the Act, is rounded off to the nearest multiple of ₹10, ignoring any paise. Where the amount is not already a multiple of ten:
- it is increased to the next higher multiple of ten, if the last figure in the amount is five or more; or
- it is reduced to the next lower multiple of ten, if the last figure is less than five.
Effect of rounding
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.
Applying Section 516 in practice
Order of operations. Compute the total income or payable/refundable amount first; ignore paise; then raise an amount with final rupee digit 5–9 to the next multiple of ₹10, or lower an amount ending 0–4 to the preceding multiple. The rounded result is the amount deemed under the Act.
Hypothetical example
₹12,345.90 becomes ₹12,350 after ignoring paise and rounding; ₹12,344.90 becomes ₹12,340.
Practical checklist
Do
- Ignore paise before rounding the rupee amount to the nearest ₹10 multiple.
- Round a rupee amount ending in 5 or more upward and an amount ending below 5 downward; retain the pre-rounding computation.
Avoid
- Do not round tax components independently where the statutory rule is for total income or an amount payable or refundable.
Illustrative example
Worked rounding examples
Hypothetical facts (illustration only, not a real taxpayer): Assume the computed amount payable is ₹1,234.95 in one case and ₹1,235.05 in another.
Ignore paise
The two whole-rupee amounts become ₹1,234 and ₹1,235.
Apply the last-digit rule
₹1,234 has last digit 4 and rounds down; ₹1,235 has last digit 5 and rounds up.
Outcome
- The first payable amount becomes ₹1,230 and the second becomes ₹1,240.
Frequently asked questions
How is total income rounded off under Section 516?
To the nearest multiple of ₹10 - rounded up if the last digit is 5 or more, and rounded down if it is less than 5, with paise ignored entirely.
Does rounding off apply to refunds too?
Yes - Section 516 applies to total income and to any amount payable or refundable under the Act.
Should every invoice be rounded this way?
Section 516 targets the computed total income or amount payable/refundable, not each source transaction.
Need help applying this provision to your situation?
Talk to our tax team about this sectionLast updated 10 October 2026