Question

Kanha, Resham, and Nisha were partners in a firm. Nisha had given a loan of \rupee1,00,000 to the firm at 10\% p.a. The accountant of the firm is emphasizing that interest on the loan will be paid at 6\% p.a. At what rate will the interest on the loan be paid to Nisha?

• A. \(6\% \ \text{p.a.}\)
• B. \(10\% \ \text{p.a.}\)
• C. \(8\% \ \text{p.a.}\)
• D. \(\text{No interest on loan will be paid.}\)

Hint:

If a specific interest rate is agreed upon, it will override the default \(6\%\ \text{p.a.}\) rate provided under the Indian Partnership Act, 1932.

Answer 1

The Correct Option is B

According to the Indian Partnership Act, 1932, interest on a partner's loan is paid at \(6\%\ \text{p.a.}\) unless there is an agreement or partnership deed specifying a different rate. In this case, the loan was given by Nisha at an agreed rate of \(10\%\ \text{p.a.}\). Therefore, as per the agreement, the interest on the loan will be paid at \(10\%\ \text{p.a.}\).