Supply of Service: personal and corporate guarantees treated as taxable between related persons; valuation rules govern taxability. Providing personal guarantees by directors to secure company credit is a supply of service between related persons and is valued under Rule 28; where RBI prohibits any consideration to guarantors the open market value may be treated as zero and taxable value may be nil, except in exceptional cases where remuneration is paid. Corporate guarantees by related companies, including holding company guarantees for subsidiaries, are also supplies of service and their taxable value is to be determined under Rule 28 as amended by the newly inserted sub rule (2), which governs valuation of such corporate guarantees and 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.
Supply of Service: personal and corporate guarantees treated as taxable between related persons; valuation rules govern taxability.
Providing personal guarantees by directors to secure company credit is a supply of service between related persons and is valued under Rule 28; where RBI prohibits any consideration to guarantors the open market value may be treated as zero and taxable value may be nil, except in exceptional cases where remuneration is paid. Corporate guarantees by related companies, including holding company guarantees for subsidiaries, are also supplies of service and their taxable value is to be determined under Rule 28 as amended by the newly inserted sub rule (2), which governs valuation of such corporate guarantees and does not apply to personal guarantees.
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