Under the Income-tax Rules, 2026, interest is to be calculated on a tax amount of ₹12,589 before rounding. What amount is used as the base for calculating interest?
Question and options
Under the Income-tax Rules, 2026, interest is to be calculated on a tax amount of ₹12,589 before rounding. What amount is used as the base for calculating interest?
₹12,600
₹12,590
₹12,500
₹12,589
Answer and explanation
Correct answer: C - ₹12,500
Rule 269(c) of the Income-tax Rules, 2026 rounds the amount on which interest is calculated to a multiple of ₹100 and ignores any fraction of ₹100, so ₹12,589 becomes ₹12,500. Rounding up to ₹12,600 would treat the fraction as a full hundred, which the rule does not do.
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