Interest on Capital

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Interest on capital received by partner are taxable under

business head or other sources head in partner IT return
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Interest received on capital is taxable in the hands of the partner. That means that interest is taxable under the head Profits or Gains of Business or Profession. Such interest shall form part of the total income of the partner and taxable at normal slab rates.
interest recd on capital is taxable in the hand of partner u/s.28 of income tax act.
Remuneration and interest received by partner from firm is taxable as Business income. However, share of profits from firm is not taxable in the hands of partner. Hence, if partner is receiving only exempt income i.e. share of profits from firm, then also he is required to file ITR-3 only.

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