Read the following passage and answer the question.

A, B and C are partners in a partnership firm sharing profits and loss in ratio of 2:2:1. Their fixed capitals are ₹10,00,000, ₹8,00,000 and ₹7,00,000 respectively. They withdrew some amount from the firm for their personal use. Partnership deed provide interest on drawings @10% p.a. but no interest on capital. Market rate of interest on capital in similar firm is 5% p.a. C also gives a loan of ₹1,00,000 to the firm without any agreement of interest whereas market rate of interest on loan is 12% p.a.

What will be the interest on B's capital?

Zero

The correct answer is option 4- Zero.

No interest on capital is provided as there is no clause related to it in agreement. So, the correct answer is zero.

If there is no clause in the partnership deed of the partnership firm then the provisions of the Partnership Act, 1932 will be applicable. Some of the provisions are:
a) Profit Sharing Ratio: In the absence of a specified profit sharing ratio in the partnership deed, the profits and losses of the firm will be divided equally among the partners, regardless of their individual capital contributions.
b) Interest on Capital: Unless explicitly stated in the partnership agreement, partners do not have the right to claim interest on the capital they have invested in the firm.
c) Interest on Drawings: If the partnership deed does not mention anything about charging interest on drawings made by partners, no interest will be levied on such withdrawals.
d) Interest on Loan: If a partner has provided a loan to the partnership for business purposes, they are entitled to receive interest on the loan amount at a rate of 6 percent per annum.
e) Remuneration for Firm’s Work: No partner is entitled to get salary or other remuneration for taking part in the conduct of the business of the firm unless there is a provision for the same in the Partnership Deed.