Increase in deduction limit in respect of
provision for bad and doubtful debts - Budget 2017 - 18
The existing provisions of sub-clause (a) of
section 36(1)(viia) of the Act, inter-alia provides that a scheduled bank (not
being a bank incorporated by or under the laws of a country outside India) or a
non-scheduled bank or a co-operative bank other than a primary agricultural
credit society or a primary co-operative agricultural and rural development
bank, can claim deduction in respect of provision for bad and doubtful debts.
The amount of such deduction is limited to seven and one-half per cent. of the
total income (computed before making any deduction under that clause and
Chapter VIA) and an amount not exceeding ten per cent of the aggregate average
advances made by the rural branches of such bank computed in the prescribed
manner at the end of the previous year.
In order to strengthen the financial position of
the entities specified in the sub-clause (a) of section 36(1) (viia) of the
Act, it is proposed to amend the said sub-clause to enhance the present limit
from seven and one-half per cent. to eight and one-half per cent of the amount
of the total income (computed before making any deduction under that clause and
Chapter VIA).
This amendment will take effect from 1st April, 2018 and will,
accordingly , apply in relation to the assessment year 2018-19 and subsequent
years. [Clause 14]
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