Accountancy Part AAccounting for Partnership

In the absence of partnership deed, interest on drawings is charged a…

In the absence of partnership deed, interest on drawings is charged at.

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → Nil

Where there is no partnership deed, or the deed is silent, the provisions of the Indian Partnership Act, 1932 apply. Under them no interest is charged on drawings.

Option (1) 6% p.a. — Incorrect. 6% p.a. is the rate the Act allows as interest on a partner’s loan to the firm, not on drawings.

Option (3) At the prevailing market rate. — Incorrect. The Act fixes no rate for drawings; without an agreement no interest is charged at all.

Option (4) 6%p.m. — Incorrect. No such rate is laid down; interest on drawings arises only by agreement.

NCERT (2026-27 edition):
Provisions of Partnership Act Relevant for Accounting – “… (c) Interest on Drawings: No interest is to be charged on the drawings made by the partners, if there is no mention in the Deed.”