Question

Exe Ltd. has balance in Provision for Tax Account of 50,000 and 75,000 as on 31st March, 2025 and 2026, respectively. It made provision for tax during the year of 65,000. Tax paid during the year was ______.

Options

• ₹ 50,000

• ₹ 60,000

• ₹ 40,000

• ₹ 75,000

Answer 1

Exe Ltd. has balance in Provision for Tax Account of 50,000 and 75,000 as on 31st March, 2025 and 2026, respectively. It made provision for tax during the year of 65,000. Tax paid during the year was ₹ 40,000.

Explanation:

The tax paid during the year is calculated by preparing a Provision for Tax Account (a liability account, where the opening balance is credited and the closing balance is debited):

\[\text{Tax Paid (Balancing Figure)} = \text{Opening Balance} + \text{Provision Made During the Year} - \text{Closing Balance}\]

$$\text{Tax Paid} = ₹50,000 + ₹65,000 - ₹75,000$$

$$\text{Tax Paid} = ₹1,15,000 - ₹75,000 = {₹40,000}$$