Regarding debtors

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 December 2014 If a debtor is not paying o/s balance payment from last 2 yrs or more & co. Don't want to show that as o/s. what will be the best way to show treat that party with and that will not create problem in income tax also?
Showing that party as bad debt in a/c's or issue cr. note to that party
what is more beneficial to Co.

Nischit Sanghavi

Nischit Sanghavi (Expert)
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11 December 2014 It is better to show amount as Bad Debts. Because, if you issue credit not it means your receivable will reduce. You cannot recover the same in future in legal terms.

Querist : Anonymous

Querist : Anonymous (Querist)

11 December 2014 Is it burden on the co. to prove that it was actual bad debts & necessary steps were taken to recover that

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Nischit Sanghavi

Nischit Sanghavi (Expert)
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11 December 2014 As you said that two years has been passed, it shows that you tried at your side to recover the amount. So it will be allowed in the Income Tax.