Interest on capital
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
28 September 2011
Is rate of interest on capital fixed as per partnership deed or changes every year as per finance act
28 September 2011
As per partnership deed no relation with finance act.
Interest on Capital is to be paid
Only when agreed upon
Interest on Capital is to be paid to partners only if it is specifically agreed upon. If there is no mention regarding this, in the partnership agreement (deed), then no interest need be paid.
Only out of profits
Interest is to be paid only out of profits. Where there is a loss, no interest should be paid on capital, even if the partnership agreement provides for the same.
@ 6% if rate is not mentioned
Where the partnership deed provides for payment of interest on capital and it does not mention the rate of interest to be paid, it is a convention to pay interest @ 6% p.a.
Interest on Capital is to be paid
Only when agreed upon
Interest on Capital is to be paid to partners only if it is specifically agreed upon. If there is no mention regarding this, in the partnership agreement (deed), then no interest need be paid.
Only out of profits
Interest is to be paid only out of profits. Where there is a loss, no interest should be paid on capital, even if the partnership agreement provides for the same.
@ 6% if rate is not mentioned
Where the partnership deed provides for payment of interest on capital and it does not mention the rate of interest to be paid, it is a convention to pay interest @ 6% p.a.
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