As per Sec. 288A of the Income Tax Act, the taxable income shall be rounded off to the nearest multiple of ...............

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MH SET Paper-II: Commerce 7th April 2024
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  1. Rs. 1,000
  2. Rs. 100
  3. Rs. 10
  4. Re. 1

Answer (Detailed Solution Below)

Option 3 : Rs. 10
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MH SET Paper 1: Held on 26th Sep 2021
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Detailed Solution

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The correct answer is - Rs. 10

Key Points

  • Section 288A of the Income Tax Act
    • This section specifically deals with the rounding off of taxable income for the purpose of calculating income tax.
    • According to this provision, taxable income is rounded off to the nearest multiple of Rs. 10.
    • If the last digit of the income is less than 5, it is rounded down. If the last digit is 5 or more, it is rounded up to the next multiple of 10.
  • Practical Example
    • If the taxable income is Rs. 1,234, it is rounded down to Rs. 1,230.
    • If the taxable income is Rs. 1,237, it is rounded up to Rs. 1,240.
  • Importance for Tax Compliance
    • This provision simplifies tax computation and ensures consistency in rounding off income across all taxpayers.

Additional Information

  • Related Provisions
    • Section 288B: Deals with rounding off of tax payable, which is also rounded to the nearest multiple of Rs. 10.
    • Both sections aim to streamline calculations and avoid minor discrepancies in income tax computation.
  • Implications in Tax Filing
    • Taxpayers must ensure that their taxable income and tax payable are rounded off correctly to avoid errors in filing returns.
    • Software and online tools for income tax filing typically perform this rounding off automatically.
  • Exceptions
    • This provision does not apply to intermediate calculations; it is only applicable at the final stage of determining taxable income.
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