Please refer to the point number 6 of Notification Number 25/2011 dated 31.03.2011 that brought amendments to Point of Taxation Rules, 2011. The relevant part is produced below for your reference:
"6. For rule 9, the following rule shall be substituted, namely:-
“9. Transitional Provisions.- Nothing contained in this sub-rule shall be applicable,-
(i) where the provision of service is completed; or
(ii) where invoices are issued
prior to the date on which these rules come into force.
Provided that services for which provision is completed on or before 30th day of June, 2011 or where the invoices are issued upto the 30th day of June, 2011, the point of taxation shall, at the option of the taxpayer, be the date on which the payment is received or made as the case may be."
Therefore for invoices issued before the effective date of these rules where provision of service is completed, tax payer is not required to apply these rules.
Moreover, an option has been given to assessee to pay tax on payment basis in case of services for which provision is completed on or before 30th day of June, 2011 or where the invoices are issued upto the 30th day of June, 2011.
Hence, in case of Bad debts, as no payment is received no tax has to be paid for the same.
Hope my clarification is valid.