Interest to partners in a partnership firm

This query is : Resolved

Arvind sharma (Querist)
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29 March 2017 If a firm wish to give interest only on Current Capital Balance of partners but not on Fixed Capital, so is it eligible for firm to do so ??

CA Shubhanshu Jain

CA Shubhanshu Jain (Expert)
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29 March 2017 Yes, Firm can do so, It fully depends on firm how much interest is to be paid on what capital and in what manner but note that such interest should not be more more than 12% (Simple Interest), Interest in excess of 12% is disallowed to firm

Arvind sharma

Arvind sharma (Querist)
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29 March 2017 but if partnership deed not specify that int. will be paid only on current a/c balance and not on fixed a/c balance,then is it possible to do so ??

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CA Shubhanshu Jain

CA Shubhanshu Jain (Expert)
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29 March 2017 if interest clause is there in deed then firm can pay interest in whatever manner on whatever capital. Main thing is clause of interest payment should be there in deed