Question

Interest on partner's drawings in the absence of a partnership deed is:

• A. 6%
• B. 10%
• C. 8%
• D. No interest

Hint:

Without a deed, no partner is charged interest on drawings.

Answer 1

The Correct Option is D

According to the Partnership Act, 1932, when there is no written partnership deed, default rules apply. One such rule states that no interest is charged on drawings made by partners. Interest is only applicable when partners have explicitly agreed on such a clause in a duly prepared deed. Therefore, in the absence of a deed, partners do not pay any interest on drawings.