If the partnership deed is silent on interest on capital, then:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → No interest on capital is payable
According to the rules stipulated in the Partnership Act (e.g., Indian Partnership Act, 1932) regarding matters where the partnership deed is silent, no interest on capital is to be allowed to any partner.
The key rules are:
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Interest on Capital: Not allowed.
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Interest on Drawings: Not charged.
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Profit/Loss Sharing: Must be shared equally.
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Interest on Loan to Firm: Allowed at 6% p.a.