Related party guarantee treated as taxable supply; corporate guarantee valuation set under amended Rule 28 irrespective of ITC. Personal guarantees by directors are a supply of service between related persons and are valued at open market value under Rule 28; where RBI precludes any lawful consideration the open market value may be treated as zero and no tax payable, except in exceptional remunerated cases where taxable value equals the remuneration. Corporate guarantees between related companies, including holding subsidiary situations, are also supplies of service and their taxable value is to be determined under Rule 28, with newly inserted sub rule (2) prescribing valuation for such corporate guarantees irrespective of the recipient's ITC; 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 guarantee treated as taxable supply; corporate guarantee valuation set under amended Rule 28 irrespective of ITC.
Personal guarantees by directors are a supply of service between related persons and are valued at open market value under Rule 28; where RBI precludes any lawful consideration the open market value may be treated as zero and no tax payable, except in exceptional remunerated cases where taxable value equals the remuneration. Corporate guarantees between related companies, including holding subsidiary situations, are also supplies of service and their taxable value is to be determined under Rule 28, with newly inserted sub rule (2) prescribing valuation for such corporate guarantees irrespective of the recipient's ITC; sub rule (2) does not apply to personal guarantees.
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