25 March 2016
No specific rate of interest available for charging the interest on Loan & Advances in the Income Tax Act, 1961. However if in rate of interest is charged in excess of prevailing market rate, then the income tax officer may disallow excess interest u/s 40A(2)(b). Moreover interest @ 12% pa is allowed as per income tax Act, 1961 u/s 40B on partner's capital.
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