Bad Debts and Dr. bal w/o
This query is : Resolved
11 June 2008
What is the difference between bad debts and Sundry dr. balances written off.
Should these accounts be maintained separately?If yes, why?
Should these accounts be maintained separately?If yes, why?
11 June 2008
Bad debts are irrecoverable amounts. Amount involved is resonably significant. When efforts made to realise the amt fails, or it is considered that, such effort will not yeild desired reasult, the amt is treated as bad debt.
Dr. balances w/off(often used term is sundry balance w/off) is writting off of small/petty balances.
Since nature of both type of transaction are different, separate accounts should be kept.
More over, allowability of both type of expense are governed by different sections under IT Act.
Dr. balances w/off(often used term is sundry balance w/off) is writting off of small/petty balances.
Since nature of both type of transaction are different, separate accounts should be kept.
More over, allowability of both type of expense are governed by different sections under IT Act.
11 June 2008
Can you please mention the relevant sections of IT Act for both items..
11 June 2008
Bad Debts = (Sec. 36(1)(vii)
The other is residuary section = 37
The other is residuary section = 37
12 June 2008
Thanks
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