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IndiaGeneral AccountingUpdated: Sep 13, 2026
Direct Answer
In India, a cheque is valid for 3 months. If a cheque issued to a vendor is unpresented after 3 months, it becomes stale. You must pass a reversal journal entry (Debit Bank, Credit Vendor) to remove it from the Bank Reconciliation Statement.
The Audit Risk
Leaving stale cheques in your BRS (Bank Reconciliation Statement) indefinitely is a major audit flaw. It artificially reduces your bank balance and understates your liabilities.
The Reversal Process
- Identify all cheques in the BRS older than 90 days.
- Reverse the original payment entry.
- The vendor's payable balance will increase again.
- If the vendor never claims the money (e.g., over 3 years), the liability must be written back to the P&L as income under Section 41(1) (Cessation of Liability).