Question

Pratibha, partner of a firm, has advanced loan to the firm of $Rs.1,00,000$. The firm does not have a Partnership Deed. Will Pratibha get interest on the loan? If yes, at which rate and why?

Answer 1

A partner apart from capital contribution can advance some amount in excess of the capital, this excess is termed as loan to the firm. A partner is eligible for interest on loan @ 6% p.a. Even if there is no partnership deed or no provision in partnership deed,still interest on loan is payable to the partner.Such interest on loan is payable even if there is a loss.

So, Pratibha is entitled to 1,00,000*6% = 6,000 as interest on loan.