Question : Exe Ltd. has a balance in Provision for Tax Account of Rs.50,000 and Rs.75,000 as of 31st March, 2021 and 2022 respectively. It made a provision for tax during the year of Rs.65,000. The amount of tax paid during the year was
Option 1: Rs.40,000
Option 2: Rs.50,000
Option 3: Rs.7,50,000
Option 4: Rs.65,000
Correct Answer: Rs.40,000
Solution : The amount of tax paid during the year was
Opening balance in Provision for Tax Account + Provision for tax during the year - Closing balance in Provision for Tax Account i.e.
50000+65000-75000 = 40000
Hence the correct answer is option 1.