If the partnership deed is silent on interest on capital, then:

The correct answer is Option (1) → No interest on capital is payable.

If the partnership deed is silent on interest on capital, then No interest on capital is payable.

Interest on Capital: No partner is entitled to claim any interest on the amount of capital contributed by him in the firm as a matter of right. However, interest can be allowed when it is expressly agreed to by the partners. Thus, no interest on capital is payable if the partnership deed is silent on the issue.