Accountancy Part AAccounting for Partnership

If the partnership deed is silent, interest on capital will be allowe…

If the partnership deed is silent, interest on capital will be allowed for:

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → No interest

Under the Indian Partnership Act, 1932, a partner has no right to interest on capital unless the partners have expressly agreed to it. If the partnership deed is silent, no interest on capital is allowed, for any period.

Option (1) 1 month — Incorrect.

Option (2) 6 months — Incorrect. Six months is the average period used for interest on drawings when dates are not given, not for capital.

Option (3) 1 year — Incorrect. Interest for a full year is allowed only when the deed provides for it.

Option (4) No interest — Correct.

NCERT (2026-27 edition):
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.”