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A and B are partners without any partnership deed. B has given loan of Rs.2,00,000 to the firm on 1st July 2023. B claim interest on loan @ 10% p.a. How much interest on loan will be paid to B for the year ending on 31st March 2024. ?

Solution

✅ Correct Option: 3

When there is no partnership deed, the provisions of the Indian Partnership Act, 1932 apply.

According to Section 13(d) of the Act, interest on a partner's loan to the firm is allowed at 6% per annum, regardless of what rate the partner claims.

Even though B claims 10% interest, only 6% p.a. will be allowed.

Calculation of Interest:

Loan Amount = Rs. 2,00,000

Period = 1st July 2023 to 31st March 2024 = 9 months

Rate = 6% p.a.

Using the formula: Interest = Principal×Rate×Time100\frac{Principal \times Rate \times Time}{100}

Interest = 2,00,000×6×9100×12\frac{2,00,000 \times 6 \times 9}{100 \times 12}

Interest = 2,00,000×6×91,200\frac{2,00,000 \times 6 \times 9}{1,200}

Interest = 10,80,0001,200\frac{10,80,000}{1,200}

Interest = Rs. 9,000


The key point here is that in the absence of a partnership deed, the statutory rate of 6% p.a. applies to partner's loans, not the rate claimed by the partner. The time period of 9 months (from July to March) is also crucial for the calculation.

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