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Section 36(1)(viia) provision for bad debts is for:
AScheduled banks and certain financial institutions
BAll companies
CAll assessees
DOnly insurance companies (per relevant Section)
Answer & Solution
Correct answer: A. Scheduled banks and certain financial institutions
1. Section 36(1)(viia) allows scheduled banks, PFIs, and SFCs deduction for provision for bad and doubtful debts.
2. Deduction is up to 8.5% of TI (before this deduction) plus 10% of average advances by rural branches.
3. Non-scheduled banks have separate sub-limits.
_Source: ICAI BoS CA Final Paper 7, Ch 3 "Profits and Gains of Business or Profession"_
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