Example 1

Suppose I make a Sale of 50000 to A

A paid me only 30000 and settled his account

In this case,20000 is Bad Debts

I will get this deduction of Bad Debts in PGBP

Example 2

Suppose I make a Sale of 50000 to A

A is expected to pay me only 30000

Hence,20000 is my expected loss for which I make Provision for Bad Debts

 I will not get deduction for this provision for bad debts

Example 3

Suppose I make sale of 40 lacs

As per past experience,I book 5% Provision for bad debts i.e. 4000000*5%=200000

In this case,no deduction will be available for this 200000

Example 4

Suppose Bank make sale of 40 lacs

Bank books 5% Provision for bad debts i.e. 4000000*5%=200000

In this case, bank deduction will be available for this 200000