Provision for Bad and doubtful debts in case of Banks - (New) Section 31(1) / (Old) Section 36(1)(viia)

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ch Advances Provision: • Additional up to 10% of aggregate average advances  • (c) Additional optional deduction: • Available to banks in (a) & (b) • Extra deduction (beyond above limits) • Limited to income from redemption of securities • Condition: Such income must be shown under business income 2. Other financial entities Includes: • Foreign banks • Public Financial Institutions • State Financial Corporations • NBFCs Deduction allowed: • Up to 5% of total income (before this deduction & Chapter VIII) 3. Special rules for assessees covered under sub-section (1), these avoid ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....erm "Rural Bank" means a branch of a scheduled bank or a non-scheduled bank situated in a place which has a population of not more than ten thousand according to the last preceding census, of which the relevant figures have been published before the first day of the tax year; [ Section 66(26) ] "Scheduled Bank" shall have the same meaning as assigned to it in section 2(e) of the Reserve Bank of India Act, 1934; [ Section 2(98) ] Under Section 36(1)(viia) of the Income Tax Act, 1961 [ Upto 31.03.2026 ] Amount deductible in respect of provision for bad and doubtful debts In the case of an Indian scheduled Bank In case of a Public Financial, State Financial Corporation, State Industrial Inve....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....btful debts made under section 36(1)(viia). • iii. Where the actual bad debts exceeds the credits balance in the provision for bad and doubtful debt account, then deduction under section 36(1)(vii) shall be allowed for such excess. • iv. Provision for bad and doubtful debts referred to in Section 36(1)(vii) means only one account in respect of provision for bad and doubtful debts and such account shall relate to all types of advances including advances made by rural and urban branches. Differences in the provisions of sections 36(1)(vii) and section 36(1)(viia) of the Income Tax Act, 1961 • The provisions of sections 36(1)(vii) and section 36(1)(viia) of the Act are distinct and independent items of....