The Government of Maharashtra on November 06, 2023, issued a circular regarding clarifying the issues pertaining to the taxability of personal guarantees and corporate guarantees in GST
This has a reference to the CBIC circular No. Circular No. 204/16/2023-GST dated October 27, 2023, relating to the clarification of the issues pertaining to the taxability of personal guarantees and corporate guarantees in the GST
The following has been clarified namely: -
• Whether the activity of providing a personal guarantee by the Director of a company to the bank/financial institutions for sanctioning 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. 25T of 2023]
