Comparison of Section 31 'Deduction for bad debt and provision for bad and doubtful debt' between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

Provision for bad debts limits deductions for financial entities and ties write-off claims to provision account debits.

Section 31 separates a capped, percentage-based deduction for provisions for bad and doubtful debts available to specified financial assessees from separate deductibility of actual irrecoverable debts. Written-off debts are deductible only if previously taken into account for income computation or advanced in the ordinary course of business; for those claiming the percentage provision the deduction is limited to amounts exceeding the provision account credit and is permitted only where the relevant bad debt or part thereof has been debited to the single provision account in the tax year.