As per Section 13(b) of the Indian Partnership Act, 1932, when the partnership deed is silent about interest on capital, no interest is payable to partners on their capital contributions.
This is a fundamental rule in partnership accounting. Interest on capital is allowed only when there is a specific agreement or provision in the partnership deed stating:
- That interest will be paid
- The rate at which it will be paid
In the absence of any such agreement, partners cannot claim interest on their capital, regardless of:
- The amount of capital they have contributed
- Whether they contributed more or less than other partners
- The duration for which capital has been invested
The 6% p.a. rate mentioned in Option 4 is the rate at which interest is charged on loans given by partners to the firm (as per Section 13(d) of the Act), not the rate for interest on capital.
Therefore, Option 1 is correct - No interest on capital is payable when the partnership deed is silent on this matter.