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CBIC Implements GST Councils Decision, Introduces 18% GST on Corporate Guarantees In a significant development, the Central Board of Indirect Taxes and Customs (CBIC) has announced that Goods and Services Tax (GST) will now be applicable to corporate guarantees between related entities, such as parent firms and subsidiaries. This decision comes into effect from Thursday, October 26, following the decision made by the GST Council on October 8. Under the new GST regulation, a standard rate o
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FAQ :
A standard rate of 18% GST will apply to corporate guarantees between related parties.
The new GST regulation came into effect from Thursday, October 26.
The tax will be levied on the higher of the financial consideration charged or 1% of the value of the guarantee.
No, this modification of the GST rule will not have any retroactive impact on transactions executed before the October 26 implementation date.
If a director provides a corporate guarantee in support of a company's loan and no fee is paid to the director, no GST will be applicable.
Yes, experts have noted that issues such as the periodicity of GST payments on corporate guarantees require further clarification.
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