interest on partners capital

[Guest]

What are the provisions for this under income tax act under sec 40 b

[Guest]

And also for salary to partners under this sec

[Rakesh Chitkara]

The partnership deed should have clause for payment of interest on partners capital.

The interest can be paid maximum @ 12@. Partnership can authorize interest payment @ more than 12% but it will be restricted to 12%.

AI Summary

Interest on partners' capital: tax deductibility requires deed authorisation and is restricted by a statutory cap. Payment of interest on partners' capital must be expressly authorised by the partnership deed and is subject to a statutory ceiling; any purported authorisation exceeding that cap will be restricted to the maximum allowable amount for tax purposes.