Partnership Deed Mandatory clause

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This query is : Resolved

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This discussion addresses whether specific wording is required for clauses concerning interest on capital and partner salaries within a partnership deed. The consensus is that the provided clauses, detailing interest at 12% p.a. as a firm expense and salary computation based on Income-Tax Act provisions, are sufficient. These terms ensure proper accounting and tax compliance for the partnership.

Pav

Pav (Querist)
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02 September 2024 I made a partnership deed and included both these terms:
Is there a requirement for specidic wordings or would what I've included suffice?

1.That interest on capital shall be payable on the amounts standing to the credit of the Partners’ accounts at the rate of 12% p.a. Such interest shall be considered as an expenditure of the firm and shall be debited to the Profit & Loss Account of the firm before arriving at the divisible profit or loss.

2. The salary shall be paid to working partners as mutually agreed by them. The remuneration payable to the said working partners shall be computed in the manner laid down or deduction under section 40(b)(v), read with Explanation 3 of the Income-tax Act, 1961 or any other applicable provision as may be in force in the income-tax assessment of the partnership firm for the relevant accounting year.