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| Approval of bad debt expense under Section 51(ITA-2023) |
Approval of bad debt expense under Section 51 | Bangladesh Income Tax Act -2023:
As per section-51(ITA-2023),
(1) For entities other than
banks and finance companies:
Bad debt expense
shall be allowed if—
(a) The debt, or any part of it, is proven to be irrecoverable and has been
written off in the business’s books of account;
(b) all reasonable efforts were made to recover the amount before it was
written off; and
(c) The debt, or part of it, had previously been recognized as income in
determining income for any income year.
(2) For banks and finance
companies: Bad
debt expense shall be allowed if—
(a) The debt, or any part of it, is determined to be irrecoverable in
accordance with applicable standards in Bangladesh, including InternationalAccounting Standards (IAS), and has been written off in the books of account;
(b) All reasonable steps were taken to recover the amount before writing it
off; and
(c) The debt, or any part of it, had been treated as income in determining
income for an income year.
Frequently Asked Question(FAQ):
1. What is the approval of bad debt expense under Section 51?
Approval of bad debt expense under Section 51 refers to the tax authority’s recognition of unpaid debts as deductible expenses under the Bangladesh Income Tax Act 2023.
2. When can bad debt be claimed as an expense in Bangladesh?
Bad debt can be claimed when it is proven irrecoverable and meets the conditions prescribed under Section 51 of the Income Tax Act 2023.
3. What documents are required for bad debt approval?
Required documents may include a debt agreement, proof of non-payment, recovery efforts, and financial statements supporting the claim.
4. Is prior approval required for claiming bad debt expense?
Yes, in most cases, prior approval or compliance with Section 51 guidelines is required before claiming bad debt as an allowable expense.
5. How does bad debt affect taxable income?
Approved bad debt reduces taxable income by allowing businesses to deduct unrecoverable amounts as business expenses.
6. Who approves bad debt expense under Bangladesh tax law?
The tax authority under the National Board of Revenue (NBR) evaluates and approves bad debt claims based on Section 51 provisions.