TaxTMI 
TaxTMI 
TaxTMI 
interest on partners capital
Dipneet Kaur
What are the provisions for this under income tax act under sec 40 b
Interest on Partners' Capital Limited to 12% Under Section 40(b) of Income Tax Act; Partnership Deed Clause Required A discussion on the provisions for interest on partners' capital under Section 40(b) of the Income Tax Act. It is highlighted that the partnership deed must include a clause for such payments. The maximum allowable interest rate is 12%, although partnerships can authorize a higher rate, it will still be restricted to 12% for tax purposes. The discussion also touches upon the salary to partners under the same section. (AI Summary)