Question

On 1st January, 2023, Abhishek, a partner, advanced a loan of ₹ 3,00,000 to the firm. In the absence of a partnership agreement, the amount of interest on the loan for the year ending 31st March, 2023, will be ______.

Options

• ₹ 18,000

• ₹ 4,500

• ₹ 9,000

• No interest will be provided.

Answer 1

On 1st January, 2023, Abhishek, a partner, advanced a loan of ₹ 3,00,000 to the firm. In the absence of a partnership agreement, the amount of interest on the loan for the year ending 31st March, 2023, will be ₹ 4,500.

Explanation:

In the absence of a partnership deed, the Indian Partnership Act, 1932, applies. According to its provisions:

Interest on a loan by a partner to the firm is payable at 6% per annum, even if there is a loss in the business.

Interest = `3,00,000 xx 6/100 xx 3/12`

= ₹ 4,500