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GST Rounding Rules for Tax Values

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posted by Rajakumari on Thu, 12/14/2017 - 12:11

In business, it is common to face scenarios where the value of tax turns out to be in decimals. How to treat such values? Should the amount of tax be retained with decimals? Or should it be rounded upward to the nearest rupee? Or should it be rounded downward to the nearest rupee? Let us first understand the methods of rounding used by businesses and later, the GST rounding rules to be used for tax values.
 

Methods of rounding for tax values
A business will usually use any of the following methods to round off tax values.

  • Normal rounding
  • Upward rounding
  • Downward rounding

Let us understand how each of these methods works.

Normal rounding
In this type of rounding, if the value in Paise is 50 Paise or more, it is rounded upward to the nearest Rupee. If the value in Paise is less than 50 Paise, it is rounded downward to the nearest Rupee.
For example: If the value of tax in an invoice is Rs. 200.60, the same will be rounded off to Rs. 201. If the value of tax is Rs. 200.40, the same will be rounded off to Rs. 200.

Upward rounding
In this type of rounding, the value in Paise is always rounded upward to the nearest Rupee.
For example: Value of tax of Rs. 200.60 will be rounded off to Rs. 201 and value of tax of Rs. 200.40 will also be rounded off to Rs. 201.

Downward rounding
In this type of rounding, the value in Paise is always rounded downward to the nearest Rupee.
For example: Value of tax of Rs. 200.40 will be rounded off to Rs. 200 and value of tax of Rs. 200.60 will also be rounded off to Rs. 200.

GST rounding rules
The method to be used for rounding off in GST invoice is normal rounding, i.e. if the value in Paise is more than 50 Paise, it should be rounded upward to the nearest Rupee and if the value in Paise is less than 50 Paise, it should be rounded downward to the nearest Rupee.
This GST calculation rounding method is used to compute the value of tax, interest, penalty, fine or refund.
Hence, tax payers should ensure that values of tax, interest, penalty, etc. are rounded off using normal rounding method.