Taxability of guarantees: personal and corporate guarantees treated as taxable supplies between related persons under GST. Personal guarantees by directors are a supply of service between related persons even without consideration and are valued at open market value; where regulation prohibits any consideration to the director, the open market value may be treated as nil. Corporate guarantees by related companies or by a holding company for a subsidiary are also supplies between related persons and their taxable value must be determined under the statutory valuation provision amended to include a specific sub-rule for corporate guarantees, applied uniformly regardless of input tax credit availability. The corporate-guarantee valuation sub-rule does not apply to personal guarantees.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Taxability of guarantees: personal and corporate guarantees treated as taxable supplies between related persons under GST.
Personal guarantees by directors are a supply of service between related persons even without consideration and are valued at open market value; where regulation prohibits any consideration to the director, the open market value may be treated as nil. Corporate guarantees by related companies or by a holding company for a subsidiary are also supplies between related persons and their taxable value must be determined under the statutory valuation provision amended to include a specific sub-rule for corporate guarantees, applied uniformly regardless of input tax credit availability. The corporate-guarantee valuation sub-rule does not apply to personal guarantees.
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