TDS Implication on Expensing Off Unrecovered Invoice Amount

[Ramanathan Seshan]

Dear Experts,

Company A sells manufacturing scrap to Company B and raises an invoice for Rs. 500, along with TCS of Rs. 5, totaling Rs. 505. The scrap is used in Company B’s power fuelling system. Both companies are unrelated. However, Company B does not make any payment against this invoice. Eventually, Company A writes off the receivable amount as a bad debt.

In such a case, is there any TDS implication for Company A when it expenses off the amount in its books?

Regards,

S Ram

AI Summary

Tax Implications of Unpaid Scrap Sale: Bad Debt Write-Off and TCS Compliance Under Income Tax Rules A manufacturing company sells scrap to another company for Rs. 500 with Rs. 5 TCS. When the buyer does not pay, the seller writes off the receivable as bad debt. No TDS implications arise in this scenario since no payment is made. The seller may potentially claim the bad debt as a deduction under income tax provisions, subject to specific statutory requirements.