Interest on Capital to Partners
Querist : Anonymous
We are at partnership firm with Two partners. This is regarding interest payable to the partner of firm. What is the rate of interest and how to calculate the interest, is any TDS applicable on interest. In partnership deed provision of interest is @ 15% per annum.
Point mentioned in Deed is as under
[The funds required for the purpose of the partnership business shall be contributed or arranged by the partners in such manner and may be mutually agree upon interest at the rate of 15% PA simple interest or such lower/ higher rate as may be prescribed under section 40(b) IV of the Income Tax Act, 1961 or any other applicable provisions as may be force for the Income Tax Assessment.]
Please guide is firm labile to pay interest on capital to the partners also want to tell we are not paying any salary or any reimbursement to any partners.
TDS on such interest is not applicable vide section 194A(3)(iv)of the Income tax Act,1961.
tds will not be applicable on any amount received by partner from the firm.
Querist : Anonymous
One more thing firm labile to pay interest on Total (Capital+Current A/c) amount.
the word contributed or arranged is to be interpreted as capital and loan account
Querist : Anonymous
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