In the absence of an agreement, interest on a loan advanced by a partner to the firm is allowed at:
A5 per cent per annum
B8 per cent per annum
C6 per cent per annum
D12 per cent per annum
Answer & Solution
Correct answer: C. 6 per cent per annum
1. Most entitlements vanish when there is no deed, but interest on a partner's loan is the exception.
2. Section 13(d) of the Indian Partnership Act, 1932 allows interest on such a loan at 6 per cent per annum.
3. The textbook repeats this figure in its Points to remember and applies it in its worked illustration on the absence of a deed.
4. By contrast, no interest on capital, no interest on drawings and no salary are allowed without a deed.
_Source: TN HSC Class 12 Accountancy (Samacheer Kalvi, Govt of Tamil Nadu), Unit 3 "Accounts of Partnership Firms - Fundamentals", §3.4 and §3.9_
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