Pl sheet in ITR-6

The Distinction:

• Bad Debt: This is a debt that has been determined to be uncollectible and has been written off in the books of accounts. Under the Income Tax Act, this is generally an allowable expense if the debt has been written off as irrecoverable.

• Provision for Doubtful Debts: This is an estimate of debts that might become bad in the future. As per settled tax jurisprudence (and Section 36(1)(vii)), a mere provision for bad and doubtful debts is generally not allowed as a deduction for tax purposes (with specific exceptions for banks and financial institutions).