There is no such provision in Income Tax Act to claim loss of Bad Debt.
How can a salaried person claim loss on bad debts
If I have lent some money to a person and he is now unable to repay, how can I claim it as a loss in income tax returns, so that I avail some tax relief. To give you an example, say that my gross taxable income is 20 lacs and the borrower will be unable to pay 15 lacs which I lent him over a period of last 2-3 years, how can get some tax relief?
Asked 8 years ago in Income Tax
If you earned interest on your loan portfolio, you should have offered the same as business income or income from other sources. If you have offered the interest income in your previous returns, then you can claim bad debts in the year in which such debt becomes bad.
As per Income tax act badbebts cannot be allowed to setoff against salary income
There is no provision in the Income Tax Act to claim set off of loss arising out of bad debts against income from salary.
A bad debt is allowable only in the case of person who is carrying on the business and is taxable and the accrual bad debt is in the course of that taxable business . As mentioned above , you are salaried person and your income is taxable under the head salary , then there is no nexus of the accrual bad debt and the salary and hence can not be claimed as deduction .
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