GST on service supplied by State Govt. to their undertakings or PSUs by way of guaranteeing loans taken by them

Last updated: 15 July 2021

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This circular clarifies the Goods and Services Tax (GST) applicability on services provided by State Governments to their undertakings or Public Sector Undertakings (PSUs) by way of guaranteeing loans. Following examination by the GST Council, it is reiterated that such loan guarantees are exempt from GST. This exemption is specifically covered under Entry No. 34A of Notification No. 12/2017-Central Tax (Rate).

Circular No. 154/10/2021-GST CBIC-190354/36/2021-TRU Section-CBEC Government of India Ministry of Finance Department of Revenue North Block, New Delhi, Dated the 17th June, 2021 To, The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioner of Central Tax (All) /The Principal Director Generals/ Director Generals (All) Madam/Sir, Sub: GST on service supplied by State Govt. to their undertakings or PSUsby way of guaranteeing loans taken by t

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FAQ :

No, GST is not applicable on services supplied by State Governments to their undertakings or Public Sector Undertakings (PSUs) by way of guaranteeing loans taken by them.

The exemption is provided under Entry No. 34A of Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017.

The issue was examined by the GST Council in its 43rd meeting held on 28th May, 2021.

Yes, the exemption under Entry No. 34A applies to services supplied by both the Central Government and State Governments by way of guaranteeing loans for their undertakings or PSUs.

Notification No : Circular No. 154/10/2021-GST
Source : https://www.cbic.gov.in/resources//htdocs-cbec/gst/Circular_Refund_154.pdf

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