Rounding off Tax Under Section 170 of The CGST Act


Date: 28 Jan 2023

Rounding off rules in GST invoices 

In some instances, the amount to be paid by the taxpayer is in decimals; thus, the person has to decide what amount to be paid. Businesses have traditionally used a variety of methods, including rounding up and down, as well as standard rounding. However, in the GST era, companies must understand the proper way to round off tax values, as specific provisions have been laid out. Busy accounting software will be helpful for all accounting-related tasks.

Methods of rounding off tax

Upward rounding off of tax:

Downward rounding off of tax

Normal rounding off of tax

How to round off under GST

Rounding off GST for multiple invoices


Methods of rounding off tax 

The businesses use the following three methods, usually:

  1. Upward rounding off of tax: 

The value of the paise is always rounded up to the nearest rupee. For example, if the tax liability is Rs.13.40, it is rounded off to Rs.14.

  1. Downward rounding off of tax 

The paise value is always rounded down to the nearest rupee. For example, if the tax liability is Rs. 67.78, it is rounded down to Rs.67

3) Normal rounding off of tax 

The value of paise is rounded upward or downward according to the two scenarios below:

  • If the value of the paise is greater than 50: It is rounded upwards to the nearest rupee.

  • If the paise value is less than 50, it is rounded to the nearest rupee

How to round off under GST 

Normal rounding is the correct method of rounding off, according to Section 170 of the CGST Act. As a result, using the standard rounding off of the tax liability method, all tax, interest, penalty, refund, or other amounts payable should be rounded off to the nearest rupee.

Rounding off GST for multiple invoices 

Following the determination of the proper rounding method, a critical question arises: Should the rounding off be done for each invoice or consolidated basis? The answer to this question is that tax liability should be rounded off on each invoice because tax is payable on each invoice. Furthermore, rounding off should be done for each component of the tax liability, i.e. separate rounding off for CGST, SGST, or IGST, for example.