why is interest on capital allowed to partners on their opening capital for full year, if no further capital is introduced or withdrawn?
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Answer:
Explanation: Under the Income Tax Act, the maximum interest at the rate of 12% p.a. is allowed. Any amount paid exceeding the effective rate is disallowed as a deduction from the firm's business income. For deduction under Income Tax, the partnership deed must authorise to pay interest on capital..thats why,the interest on capital is allowed to partners..
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The interest on the capital is allowed to the partners on their opening capital because the maximum tax rate posed on the capital is only around 12%.
Explanation:
- The opening capital is offered to the employees with this interest.
- This is the maximum interest level and it cannot be changed.
- People will get the sum of the amount with this interest rate when P.F is cleared.
- The opening capital is highly essential for any organization and it is offered to the employees on the deduction of taxes every month.
To know more:
1) What is capital interest
https://brainly.in/question/11332314.
2) Why is the reward for capital interest
https://brainly.in/question/4624725
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