Find income tax paid by X Ltd. for operating activities, based on information given in the following extract of Balance Sheet of X Ltd.
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Extract of Balance Sheet of X Ltd. |
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Particulars |
Note No. |
31.3.21 |
31.3.20 |
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Short term Provision (Provision for Tax) |
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95,000 |
80,000 |
Additional information :
Income Tax paid during the year includes ₹ 15,000 on account of dividend tax.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) - ₹ 65,000.
Previous year provision for tax will be paid in the current year i.e. ₹80,000.
This ₹80,000 includes ₹15,000 dividend tax it will be deducted to calculate the income tax paid = 80,000 - 15,000
= ₹65,000
- Dividend tax is considered in investing activity.
- Current year provision is assumed to be paid in the next year.