Analysis of taxability of personal guarantee and corporate guarantee under GST from October 2023

Vivek Jalan | Last updated: 30 October 2023

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This analysis clarifies the GST treatment for personal and corporate guarantees, particularly from October 2023 onwards. While corporate guarantees provided for related parties are now subject to GST with specific valuation rules (1% of the guarantee amount or actual consideration, whichever is higher), personal guarantees from directors to their companies are generally not taxable under GST, provided no consideration is paid as per RBI guidelines. The article details how these rules apply and the valuation methods employed.

1. Whether GST on Corporate guarantees provided by one person to another is applicable retrospectively or prospectively from 26th October 2023? Comments - The following points need to be considered - a. Rule 28(2) of CGST Rules 2017 shall come into force on the date of their publication in the

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About the Author

Vivek Jalan

DESIGNATED PARTNER

Mr. Vivek Jalan is a FCA, Qualified LL.M (Constitutional Law) and LL.B. He is the Chairman of The Fiscal Affairs and Taxation Committee of The Bengal Chamber of Commerce and Industry. He is the Convenor on Indirect Taxes of the CII- Economic Affairs and Taxation Committee (ER); He is also a visiting faculty for Indirec ... Read more

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