Provision for Bad and doubtful debts in case of Banks - Section 36(1)(viia)

Provision for bad and doubtful debts: banks may claim specified provision deductions and rural advance additions, actual write offs limited by provision balance.

Provision for bad and doubtful debts permits specified percentage deductions from income when the provision is debited to the profit and loss account, with additional deduction linked to aggregate average advances by rural branches computed by monthly outstanding averages. Actual bad debts are deductible only if debited to the provision account and to the extent they exceed its credit balance; the general provision and actual write off provisions operate independently, with non rural write offs generally allowable in full and rural write offs subject to the provision balance.