The Central Board of Indirect Taxes and Customs (CBIC) on October 27, 2023, issued a circular regarding clarifying the issues pertaining to the taxability of personal guarantees and corporate guarantees in GST
The following has been clarified namely: -
• Whether the activity of providing personal guarantee by the Director of a company to the bank/financial institutions for sanctioning of credit facilities to the said company without any consideration will be treated as a supply of service or not and whether the same will attract GST or not
• Whether the activity of providing corporate guarantee by a person on behalf of another related person, or by the holding company for sanction of credit facilities to its subsidiary company, to the bank/ financial institutions, even when made without any consideration will be treated as a taxable supply of service or not, and if taxable, what would be the valuation of such supply of services.
[Circular No. 204/16/2023-GST]
