GK
TAXES IN INDIA
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Interest on capital of or loan from partner of a firm is allowed as deduction to the firm to the extent of:
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12 % p.a. even if it is not mentioned in partnership deed
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18 % p.a.
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12 % p.a. or at the rate mentioned in partnership deed whichever is less
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None of these
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Explanation:
Detailed explanation-1: -Is deduction allowed for interest paid before the date of partnership deed but subsequently authorised by the deed? No, retrospective deduction is not allowed.
Detailed explanation-2: -The rate of interest on partners capital should not be higher than 12%. If the interest paid exceeds 12% of the capital, the excess is disallowed. It is not permissible if the tax is paid on a presumptive basis under sections 44AD or 44ADA.
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