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 or loan received by a partner from a firm is:
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Taxable U/H business and profession
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Taxable U/H income from other sources
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Exempt U/S 10(2A)
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None of these
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Explanation:
Detailed explanation-1: -The amounts which are deductible as remuneration or interest in the hands of the firm under section 40b are taxable in the hands of the partner which are receiving such amounts under the head Profit from business/profession.
Detailed explanation-2: -That means that interest is taxable under the head Profits or Gains of Business or Profession. Such interest shall form part of the total income of the partner and taxable at normal slab rates.
Detailed explanation-3: -Interest on capital account is an appropriation. Appropriation means it is paid only and only if there is profit.
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