Multiple choice

Interest on capital subscribed by a partner may be provided for in the partnership deed is

  1. @ 6% per annum, provided it is payable only out of profits

  2. @ 8% per annum, provided it is payable only out of profits

  3. @ 8.5% per annum, provided it is payable only out of profits

  4. at any rate, provided it is payable only out of profits
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The Indian Partnership Act allows partners complete freedom to determine the rate of interest on capital in their partnership deed. There's no prescribed maximum rate like 6%, 8%, or 8.5% - partners can agree to ANY rate they choose. The only statutory requirement is that such interest must be payable only out of PROFITS, not out of the firm's capital, which protects the firm's financial stability.

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