Taxability of guarantees: personal guarantees may be taxable zero where no consideration; corporate guarantees valued per prescribed rule. Personal guarantees by directors are supply between related persons even without consideration; due to regulatory prohibition on paying consideration to such guarantors, their open market value may be treated as zero and thus taxable value zero unless remuneration is in fact paid. Corporate guarantees between related companies, including holding-subsidiary guarantees, are supply and their taxable value is to be determined by the prescribed valuation rule; a newly inserted sub-rule governs valuation of such corporate guarantees and applies irrespective of input tax credit availability. The 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 guarantees may be taxable zero where no consideration; corporate guarantees valued per prescribed rule.
Personal guarantees by directors are supply between related persons even without consideration; due to regulatory prohibition on paying consideration to such guarantors, their open market value may be treated as zero and thus taxable value zero unless remuneration is in fact paid. Corporate guarantees between related companies, including holding-subsidiary guarantees, are supply and their taxable value is to be determined by the prescribed valuation rule; a newly inserted sub-rule governs valuation of such corporate guarantees and applies irrespective of input tax credit availability. The valuation sub-rule does not apply to personal guarantees.
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