Home › CA Final › taxation › Profits and Gains of Business or Profession › Interest on partner capital allowable under Sect…
Interest on partner capital allowable under Section 40(b) up to:
A9%
B18%
C12% per annum (per partnership deed)
DNo interest (per relevant Section)
Answer & Solution
Correct answer: C. 12% per annum (per partnership deed)
1. Section 40(b) permits deduction of interest to partners if authorized by partnership deed.
2. Maximum rate is 12% per annum simple interest.
3. Excess over 12% disallowed in firm; not taxable in partner's hands either.
_Source: ICAI BoS CA Final Paper 7, Ch 3 "Profits and Gains of Business or Profession"_
Related questions
Non-speculative business loss in current year can be set off against:Section 145 method of accounting for PGBP is:'Block of assets' under Section 2(11) is:Section 36(1)(iva) deduction is for:Section 37(1) general deduction allows expenditure that is:Section 36(1)(viia) provision for bad debts is for:Section 30 covers expenses related to:Section 32AD investment allowance was for new plant in backward areas of: