Interest on Partners Capital?

Dear Amit,

    Its on the capital contributed without adding the remuneration

For reference u can go through the problem on presumptive taxation from May 04 paper. It is slightly similar to your query

whether interest on capital is on capital contributed only in cash or it can be also on capital introduced in kind(furniture brought up shall be liable for interest on capital)..............????

plz tell me interest on partners capital is  calculated on closing balance of partners capital or not???????????????

Interest on capital has to be calculated on the running account balance of partners during the year starting from the opening balance. Normally interest and remuneration is credited to capital account at the end of the year. Hence interest on remunertion, share of profit and interest will not computed in the same year. However for the coming year the interest will be calculated on entire opening balance which encompasses the interest, remuneration and profit portion of the previous years.

With regard to this point can anyone suggest me... is it mandatory to charge interest on capital?