Hi
One of our clients who is a partnership firm is having some dues from certain customers which is due for last three years. The client is in the opinion that they wont be able to recover the same anymore.. Please help me to deal with it and how to do provisioning of bad debts under income tax as per assessment of firms rules Please help
Menu
Bad Debt Provisioning
Replies (8)
just write off it in the books as actual bad debt and keep all the records safe like invoices and mails safe for scrutiny assessment if any for future
please note that in future if scrutiny assessment will happen then AO will ask just one question when it was booked as income in the books of account then you have to provide proof for that
Thanks for reply.. But can you please elobrate on what basis we can write off some figures.. I mean is there any minimum period for treating due as bad debts...
And is bad debts an admissible expense while computing tax of a firm.. Please help
yes bad debt is an admissible expense under section 36 (vii) of income tax act
Noted.. Thanks a lot
Agreed with Mr. Kant
Hi,
First and Foremost Make a Provision for Bad Debts in books, and after satisfactory follow up for recovery is made and when it is fully confirmed that The Debt is not Recoverable then it should be written off in books of accounts.
However all the Evidence should be maintained that recovery process was undertaken to satisfy the Assessing Officer.
1.Make a Provison for Bad Debts.
2. Then Transfer to Bad Debts Account.
Recent Threads
- What's CGAS?
- A Comprehensive Guide to Modern Digital Marketing
- Income tax status
- Demand raised for 'Self assessment tax' amount AY2
- TDS payment using Form 26QB when buying property o
- Export sales not realised payment not received fro
- RCM related queries
- Negative Export Value in GSTR 3B
- Income tax intimation -AY 24-25
- Tax Implications of Alumni Union (R) under Society
Related Threads
CAclubindia
