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Release The Bad To Relief

Bad Debt Relief

What is Bad Debt Relief?

1.  The bad debt relief may be claimed subject to:

  • fulfilled requirements under (s.58 GSTA 2014) where the person has not received any payment or part of the payment in respect of the taxable supply from the debtor after the sixth month from the date of supply and sufficient efforts have been made by him to recover the debt; or

  • fulfilled Part X of GST Regulations 2014 where the taxable become insolvency; and

  •  the supply is made by a GST registered person to another GST registered person; and


2.  The bad debt relief shall be claimed immediately in the taxable period after the expiry of the sixth month from the date of supply.

3.  If the bad debt relief is not claimed by the supplier in the immediate taxable period immediately after the expiry of the sixth month, then the taxable person has to notify the Director General (DG) within 30 days after the expiry of the sixth month on his intention to claim at a later date through TAP.

4.  A GST registered person who has made the input tax claim but fails to pay his supplier within six months from the date of supply shall account for output tax immediately after the expiry of the sixth month (s.38(9) GSTA 2014)


5.  The word ‘month’ in (sec.58 GST 2014) refers to calendar month or complete month –

6.  Records requirements to claim GST relief on bad debts

  • documentary evidence showing the time, nature, purchaser’s details and the consideration of the supply;

  • records or any other documents showing that you have accounted for and paid the tax;

  • records or any other documents, for example debtor’s aging list showing that the consideration has not been received after 6 months from the date of supply and accounted as bad debt in the taxable person’s accounts;

  • records or any other documents showing that sufficient efforts have been taken by the registered person to recover the debt, example letters of demand or reminder.

7.Example of a record need to keep for GST Bad Debt Claim.

Benefits of Using Bad Debt Relief

  • Detect Bad Debt Relief after 6 months- Generate the report and post the selected transactions as Bad Debt Relief, which is only claimable in the month of 6.

  • Automatic generation and posting at the end of the month- Easy to track back transaction history.

  • Track Bad Debt Recovered- Once customer return a payment, system could identify it as a bad-debt and then recover it.

How Bad Debt Relief Works?

Step 1: Obtain GST registration number from customer who already registered under GST Act.

Step 2: Look for Customer Aging Report Detail to identify which customer owed us more than 5 months (month of six stated in GST Act is equal to month of five in Mr. Accounting).

Step 3: Run GST Bad Debt Relief as per below.

Step 4: After login to GST Bad Debt Relief, user needs to key in the Month of six and GL posting date, the click the Generate button. Make sure that the outstanding shown in GST Bad Debt Relief is the same with the Customer Aging Report Detail.

Step 5: Press Post button to post the transaction to GL and GST-03 form

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