Related-party guarantees treated as taxable supplies; corporate guarantees valued under prescribed valuation rule, personal guarantees often valued zero. Providing a personal guarantee by a director to secure company credit is a supply between related persons and valued under Rule 28; where RBI mandates no consideration, open market value may be zero, otherwise taxable value equals the consideration. Corporate guarantees between related persons or by a holding company for its subsidiary are supplies whose taxable value is to be determined under Rule 28 and, pursuant to an inserted sub rule (2), such valuation rule applies irrespective of input tax credit availability; sub rule (2) 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.
Related-party guarantees treated as taxable supplies; corporate guarantees valued under prescribed valuation rule, personal guarantees often valued zero.
Providing a personal guarantee by a director to secure company credit is a supply between related persons and valued under Rule 28; where RBI mandates no consideration, open market value may be zero, otherwise taxable value equals the consideration. Corporate guarantees between related persons or by a holding company for its subsidiary are supplies whose taxable value is to be determined under Rule 28 and, pursuant to an inserted sub rule (2), such valuation rule applies irrespective of input tax credit availability; sub rule (2) does not apply to personal guarantees.
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