interest on capital and loan in pgbp

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

17 October 2011
the limit of 12% on interest in PGBP is for
- only interest on partners capital
- only interest on loan received from the
partners
- Both of above

and whether this limit of 12% is applicable in sole proprietor business or not

CA RICHA BADALIA

CA RICHA BADALIA (Expert)
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17 October 2011 Partnership Act does not make any distinction between interest to partner on loan or capital.Therefore the limit of 12% applies to both.
There is no such limit in case of Sole prop. business.

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Querist : Anonymous

Querist : Anonymous (Querist)

17 October 2011 it means this limit of 12% ( allowed in pgbp ) will be clubbed ( if the capital introduced in the firm rec. from spouse )in the hands of spouse

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CA RICHA BADALIA

CA RICHA BADALIA (Expert)
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17 October 2011 Yes ,clubbing provision applicable to interest from firm.

Querist : Anonymous

Querist : Anonymous (Querist)

17 October 2011 there is any prescribed limit of interest(as %) in pgbp if loan is rec from outsiders ( not a partner in firm )

Querist : Anonymous

Querist : Anonymous (Querist)

17 October 2011 mr. a rec. a cash gift of rs 100000 from his spouse and he gave this amount as a loan at 15% interest p.a. in a firm in which he is a partner. at the end of the year he rec rs. 15000 as interest. what amount will be taxable in the hands of Mr. A and his wife

will clubbing provision apply in the hands A's wife or not if yes what amount will be club.

if amount of clubbing is differ from interest rec.than what is the reason for it

CA RICHA BADALIA

CA RICHA BADALIA (Expert)
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17 October 2011 No, in case of loan from outsiders no specific allowable % is there.The whole amount will be allowable.

CA RICHA BADALIA

CA RICHA BADALIA (Expert)
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17 October 2011 Rs. 12000(12%)will be taxable in the hands of Mrs. A

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Querist : Anonymous

Querist : Anonymous (Querist)

17 October 2011 what will be treatment of difference of rs 3000 ( 15000-12000)

CA RICHA BADALIA

CA RICHA BADALIA (Expert)
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17 October 2011 See as the firm is getting deduction of Rs. 12000 only, Rs. 12000 would be taxable in hands of partner.RS.3000 will not be taxable in hand of partner.

Querist : Anonymous

Querist : Anonymous (Querist)

17 October 2011 but the income of a partner from firm as a interest is rs 15000

when he rec. rs 15000 in his account then why she ( after clubbing) show rs 12000 as a interes in his ROI

I WANT TO KNOW WHAT IS THE FACT