Question

In the absence of a Partnership Deed, what are the rules relating to interest on a loan given by a partner?

Answer 1

In the absence of a Partnership Deed, the Indian Partnership Act, 1932 lays down the following rules regarding interest on a loan given by a partner:

1. Interest on loan: If a partner advances a loan to the firm, the partner is entitled to receive interest at the rate of 6% per annum on the loan amount.
2. Interest payable even in case of loss: Such interest on a loan is payable even if the firm incurs a loss, as a partner giving a loan is treated as a creditor of the firm.