Export bill Write Off

Others 533 views 4 replies

Kallol Sarkar

Accountant

189 Points Posted on 19 September 2021

Export invoice of machinery items raised in 2015-16 of Rs. 20 lacs. The customer paid Rs. 10 lacs in 2017-18. Remaining Rs.10 lacs will not be paid by the customer on the ground that the material dispatched was not fully technically compliant and as they had to make some alteration to the goods at their own cost so as to bring it in workable condition. The customer already issued us a letter that on the above mentioned ground they have deducted remaining 10 lacs. How to write off this unpaid Rs. 10 lacs.?

Now as per RBI guidelines, Self basis write off is allowed @ 5% of the total export proceeds realized during the previous year which comes to Rs. 13.50 lacs in our case.

Then what will be the maximum amount that we can write off for this single invoice?

Please suggest

Replies (4)

yasaswi gomes

My grammar is 💯 good I

7301 Points Posted on 19 September 2021

I think 10% or 5% of the invoice value written off by shipping people is 100% tax deductible. so write off

By Unrealised bills a/c 10% value

To Receivables a/c 10% value

and then write off the rest of the amount like 9 lakhs

By Bad Debts a/c

To Receivables a/c

I think you will get tax benefit in % as per the IT act

yasaswi gomes

My grammar is 💯 good I

7301 Points Posted on 19 September 2021

U/s 36(2)(iv) where any such debt or part of debts is written off as irrecoverable in the accounts of the previous year and the Assessing Officer is satisfied that such debt or part has become a bad debt in any earlier previous year not falling beyond a period of which previous years immediately preceding the previous year in which such debt or part is written off, the provisions of sub-section (6) of section 155 shall apply. It means that the assessment made for these years shall be re-opened and total income shall be recomputed after allowing the claim for bad debts.

I think there is a small catch here, Tax laws are advising to do

Supplier a/c

To Receivables a/c

This is one of the criteria where you can claim for bad debts. I hope you will find better answers if you browse these sections`