Question

The following information was extracted from the books of Mask Ltd. answer the question (In accordance with the provisions of the Companies Act, 2013):

Particulars	₹
10% Debentures payable after 3 years	5,00,000
10% Bank Loan from PNB repayable after 4 years	2,50,000
Stock-in-Trade (Inventories)	1,00,000
Goodwill	1,25,000
Computer Software under Development	1,25,000
Provision for Tax	1,50,000

Provision for tax of the company will be shown under the sub-head of the Current Liabilities of the Balance Sheet as ______.

Options

• Trade Payable

• Short-term Borrowings

• Other Current Liabilities

• Short-term Provisions

Answer 1

Provision for tax of the company will be shown under the sub-head of the Current Liabilities of the Balance Sheet as Short-term Provisions.

Explanation:

According to Schedule III, Part I of the Companies Act, 2013, Provision for Tax is an estimated liability for tax expenses that will be settled within the current financial year. Since it is a provision meant for a short period (under 12 months) and is not a direct loan borrowing or a trade payable, it is strictly classified under the sub-head Short-term Provisions under the main head of Current Liabilities.