What is the difference between Bad debts and bad & doubtful debts. What are the legal compliances for the provisions for doubtful debts and bad debts recovered after being written off. 

Bad Debts is a debt which is not collectible and is worthless to the creditor. It is usually a product of the debtor which has gone for bankruptcy. Bad Debts also occurred when the collection cost is more than the amount of debt. As soon as the debt is bad the business should be allowed to written off as an expense in it's Income tax return.

There are four category for the determination of NPA in banking and there  is mentioned that if any amount which is unpaid to us than that becomes bad bedts I.e. any amount from Mr x is pending and he denied on the payment than it becomes bad debts and when we have uncertainty about the receipt than it becomes bad and doubtful debts.

Bad debts are the one which r irrecoverable however  bad and doubtful debts are one which has the probability of being recovered in the future...however the uncertainty still exists...bad debts is considered to be indirectly effecting the operations therefore is been debited to p&l statement however doubtful debts are still effecting sundry debtors therefore would be deducted from gross figure of debtors...I hope the answer is going to be helpful 

Bad debts-

Meaning- Those debtor who have bankrupt nd not paying the dues eg. You hv made crefit sale of 10000 the debtor is not paying you total or partial amount.

Understanding - 

Bad debt can only occur in credit sale

Law does not require reason that why debtor is not paying (there can be reason that he has gone bankrupt or not traceable)

fact that you have credited sale to p&l when you made that sale and now you are debiting the p&l is the only requirement.

It is actual bad debt

Application- 

Directly dr p&l if no prov. Made

If prov us given in book for bad & doubtful debt then dr that actual bad debt therefrom

Bad & doubtful debt -

Meaning - debtor who are not denying to pay the amount or may result bad debt in future. Eg- You made cr sale of 10000 and asked party to pay, the party is not denying but not evn payng

Understanding- 

Occur in cr sale

Not actual bad debt but you presume that debtor will not pay ( eg market goodwill of debtor not good or he is goin to liquidate)

Application- 

Dr p&l with the amount that you think party will not pay . In above eg 10000