Tax treatment of interest on drawings

what is the tax treatment of interest on drawings in case of partnership firm????????????? , should interest on drawing be put as a clause in partnership deed considering income tax point of view??????????? , kindly reply immediately its urgent. will interest on drawing be classified as business income or income from other sources????????????

Replies (1)

Interest on Drawings will be given the same treatment as that of Interest on Partners Capital. In case it is negative, it will be credited to the Profit and Loss Accounts as Interest on Partners Capital.

There is no need to put a separate clause in the Partnership Deed. 

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