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What this calculator does
Test whether a bad debt can be deducted: it must be written off in the books, already taxed as income and net of recoveries. Shows the amount that passes the screen.
What you enter
- Original debt outstanding (₹)
- Amount actually written off (₹)
- Amount already recovered (₹)
- Previously included in taxable business income? — options: Yes — evidenced, No / not evidenced
- Actual write-off in ledger? — options: Yes, No — provision only
Results are an educational screen based on the figures entered and the rule summarised above. They are not advice and do not replace the current Act, rule or accounting standard, or professional review of the facts.
Common questions
Is an ECL provision deductible?
No. An expected-credit-loss provision in the accounts is not an actual write-off of a particular debt.
Do recoveries of a written-off debt matter?
Yes. Amounts recovered later are taxable in the year of recovery, and the deduction on the original write-off is only for the net unrecovered amount.
Is a debt written off in the books but not yet legally irrecoverable deductible?
Yes. Under section 36(1)(vii) a write-off in the books is enough; the debt need not be proved irrecoverable in court.