01 January 2024
The assesse company had given corporate guarantee to State Bank of India on behalf of its subsidiary company XYZ Limited for credit facilities availed by XYZ F.Y 2010-11. The said corporate guarantee had been released by bank on dated 22-10-2019. Kindly advise in above mention case GST applicable or not
14 January 2024
A new provision has been added in CGST Rules (with effect from October 26, 2023). This says: ”The value of supply of services by a supplier to a recipient who is a related person, by way of providing a corporate guarantee to any banking company or financial institution on behalf of the said recipient, shall be deemed to be one per cent of the amount of such guarantee offered, or the actual consideration, whichever is higher.” This means if the corporate guarantee was ₹100 crore, then ₹18 lakh would be the GST liability.
There will be no GST if a director provides a personal guarantee for a loan from a bank or any financial institution to his/her own company.
15 January 2024
Sir, The assessee company corporate guarantee has been given without consideration to the subsidiary company and before of GST laws were implemented on 01.07. 2017, when the provisions of service tax had been applicable.
CAclubindia
