TaxTMI 
TaxTMI 
Parent / Sister Concern of XYZ is giving a Bank Guarantee of the foreign bank to the foreign customer on behalf of XYZ. This bank guarantee is towards any damage / defects to the product exported by XYZ. The foreign bank is charging certain charges on monthly basis against this bank guarantee to the Parent / Sister Concern of XYZ. The Parent / Sister Concern is paying the same to the foreign bank and recovering from XYZ on monthly basis. Is XYZ required to pay GST on it as import of service?
Import of Service
25 Sep 2019 
2 Replies 
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Import of service: recipient liable under reverse charge when service is routed via related concern; input tax credit allowed.
Where a foreign bank provides guarantee-related services from outside India and the parent/sister concern procures them on behalf of XYZ, the service is treated as received in India by XYZ through the related concern; XYZ is liable under the reverse charge mechanism and may avail input tax credit for the foreign bank's charges recovered through the related concern. (AI Summary)
Where a foreign bank provides guarantee-related services from outside India and the parent/sister concern procures them on behalf of XYZ, the service is treated as received in India by XYZ through the related concern; XYZ is liable under the reverse charge mechanism and may avail input tax credit for the foreign bank's charges recovered through the related concern. (AI Summary)