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

TDS on bad debt write offs: no TDS triggered by accounting write off; TCS and bad debt deduction remain separate obligations.
Writing off an unpaid trade receivable does not itself trigger TDS because no payment is made or withheld; TCS collected at sale remains a separate compliance matter and, if deposited, is unaffected by a subsequent bad debt write off. The amount written off may be claimed as a business deduction subject to statutory conditions requiring the debt to have been included in income and properly written off in the books.