Which of the following expenses is disallowed under income tax:-

.Interest on Partner's Capital @18%

The anser is 1. Interest on Partner's Capital @18%

1. interest on partner capital

Reason

S34 Income Tax (Trading and Other Income) Act2005

You should disallow interest on partners' capital accounts. This interest is an allocation or distribution of profit to a proprietor.

If a partner advances money on loan to his firm for the purposes of the business, the interest payable is allowable as an interest expense to the business and is chargeable as interest on the partner.