Annual Income Tax Rounding Section 288B: Rounding off Income Tax

Section 288B: Rounding off Income Tax

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 above 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.

Eg: If the total tax payable of a taxpayer is Rs. 62923.25, firstly the paise would be ignored and the tax would be assumed to be 62923 and thereafter as the last digit is less than 5, this figure would be reduced to the nearest multiple of Rs. 10 i.e. Rs. 62920. If instead of Rs. 62923.25, the tax would have been Rs. 62926.25, it would have been rounded off to Rs 62926 and then to Rs 62930

As per the Sec 288B Tax needs to be rounded to the nearest INR 10. Currently in SAP system, this is rounded to the nearest INR 1.

SAP release snote for this legal change :   2094637 – HINCALC0: Annual Income Tax Rounding

Symptom

This note contains changes related to the rounding of Annual Total Income Tax.

As per the Sec 288B Tax needs to be rounded to the nearest INR 10. Currently in SAP system, this is rounded to the nearest INR 1.

Other Terms

Total Income Tax, /450, Rounding-off, Annual Tax rounding.

Reason and Prerequisites

Legal change

Solution

The legal change described under ‘Symptom’ is provided.

To get the changes, apply the HR Support Package(s) indicated for your release in the ‘Reference to Support Packages’ section of this Note.

Alternatively, follow the manual instructions provided in the document ‘Manual Instruction_constant.pdf‘ and then apply the correction instructions attached with the note.

Note:

1. This change is effective from the FY 2014-15.

2. A new payroll constant ‘TAXRO’ is provided to control the rounding behavior. This constant will have either of the following values.

     a. Value ‘0’ – The annual income tax will not be rounded.

     b. Value ‘1’ – The annual income tax will be rounded.

Header Data

Validity

Correction Instructions

Support Packages & Patches

Attachments