GST Council’s view on taxability of corporate guarantee is a mixed bag, say experts

The GST council has clarified that corporate guarantees given by a parent company to its subsidiary will be subject to goods and services tax (GST). This decision has implications for holding companies that have extended guarantees to their subsidiaries in India. The GST council has recommended that the taxable value of corporate guarantees be set at 1% of the guarantee amount or the actual consideration, whichever is higher. Additionally, the council has stated that no GST is to be paid when a company's director provides a personal guarantee to a bank or financial institution without receiving any consideration. Clarificatory circulars will be issued regarding these decisions. https://ift.tt/LMw7cCd