Bad debts
This query is : Resolved
02 July 2012
What is the rule for treating Debtor as bad debt. For how much yr bad debt will be written off.
02 July 2012
The rule for treating a debt as bad debt under the income tax is that it should be written off in the books of accounts and the company has taken all reasonable steps to recover the amount or it it should be explained to the satisfaction of the assessing officer that any steps would be useless. Please refer to section 36(1)(vii) of the income tax act.
02 July 2012
DOES THERE ANY LIMITED PERIOD WITHIN WHICH BAD DEBT WILL BE RECOGNIZED.
02 July 2012
There is no limit on the time period within which the bad debt will have to be recognised. The business can write off the bad debt as and when they have information that the debt has turned bad provided the other conditions like legal action etc... eg. You get a news that debtor has been declared insolvent by the court etc...
02 July 2012
There is no hard & fast rule for treating a debtor as "BAD"..
It depends upon the general business policies & management estimates..
It depends upon the general business policies & management estimates..
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