Question

Tax paid during the year ended 31st March, 2023 was rupee 15,000. While calculating Net Profit before Tax and Extraordinary items, the amount of provision for tax to be added is .......

• A. rupee 30,000
• B. rupee 25,000
• C. rupee 10,000
• D. rupee 15,000

Hint:

While calculating Net Profit before Tax, always add both the tax paid during the year and the increase in provision for tax to get the correct value.

Answer 1

The Correct Option is A

1. Data Provided: - Provision for tax as of April 1, 2022: rupee 10,000 - Provision for tax as of March 31, 2023: rupee 25,000 - Tax payments made during the year: rupee 15,000 2. Calculation of Provision to be Added: \[ {Provision to be added} = {Tax paid} + {Increase in provision} \] 3. Calculation of Increase in Provision: \[ = rupee 25,000 - rupee 10,000 = rupee 15,000 \] 4. Total Provision to be Added: \[ = rupee 15,000 + rupee 15,000 = rupee 30,000 \] Therefore, the provision for tax to be added is rupee 30,000 (Option A).