Sec 36

This query is : Resolved

venky Krish (Querist)
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18 May 2015 Please explain me the Bad debts deduction undersec 36 with the help of an example.

Urgent.

Thanks in advance

CA-CWA RAVI

CA-CWA RAVI (Expert)
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18 May 2015 Under section 36 only those bad debts are allowed as deduction .. which were taken into consideration of calculation of Net Profit in prior years.

so suppose you made some sales and debtors defaulted .. the actual debts would be allowed as deduction.
but if you suppose given some loan in previous years and the person defaults .. it will not be allowed as deduction as the Loan is not a part of PL account and wasnt considered in previous years in calculation of Net Profit.

Please also note that any provision for bad debts is not allowed in general. Except for the Banking and financial institutions.

venky Krish

venky Krish (Querist)
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19 May 2015 Thank you Jii.

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venky Krish

venky Krish (Querist)
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19 May 2015 Thank you Jii.

venky Krish

venky Krish (Querist)
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19 May 2015 But That section says that the amount of deduction relating to any such debt or part thereof shall be limited to the amount by which such debt or part thereof exceeds the credit balance in the provision of bad and doubtful debts account.

Please explain me this.

Suppose my Provision is 100 in PY
Now i would like to show all my debtors as bad debts this year ....Can i able to take all my debtors as bad debts as it exceeding the Provision of last year....suppose lets say my debtors value is 120...How much i can able to show it as deduction ...

Thank you