Provision For Bad Debts

[Asked by Guest]

Dear Sir

Please Ask Provision for Bad Debts is Allowed expense in Income tax View ?/

[Ganeshan Kalyani]

In my view it is an eligible for deduction under Income Tax. However I welcome views of Experts to share their views as well. Thanks.

[DR.MARIAPPAN GOVINDARAJAN]

Provision for bad debt is allowed as an expenditure.

[KASTURI SETHI]

Thanks to both experts Sh.Ganeshan Kalyani, Sir and Sh.MARIAPPAN GOVINDARAJAN, Sir as I am gaining knowledge about Income Tax, Balance Sheets and accounting treatment through this forum.

[Mahir S]

Sir,

I am of the view that such amount is allowed as expense BUT with a debit to the bad debt expense account (which appears in the income statement) and a credit to the provision for doubtful debts account (which appears in the balance sheet).

AI Summary

Provision for bad debts treated as deductible expense under income tax, subject to accounting recognition and matching.
Provision for bad debts is treated as an allowable income-tax expense when recorded using standard accounting entries: debit bad debt expense (income statement) and credit provision for doubtful debts (balance sheet); the provision is therefore described as an expenditure for tax purposes consistent with matching and recognition principles.