TaxTMI 
TaxTMI 
Holding Company gives corporate guarantee to it’s Subsidiary.
A director gives personal guarantee to Bank for loan given to company in which he is a director.
In both the cases no fee is charged.
Is such service a taxable supply.
Providing Guarantee - Whether Supply
28 Sep 2020 
9 Replies 
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Taxability of guarantees: corporate and personal guarantees treated as taxable supply; value based on open market or valuation rules.
Guarantees provided by holding companies to subsidiaries or directors personally to companies qualify as taxable supplies under Schedule I when made in the course or furtherance of business; such guarantees are classifiable as financial services. If no fee is charged, valuation must follow the GST valuation hierarchy: open market value, value of like goods or services, or resort to cost based and residual valuation methods; invoice value may be deemed open market value where the recipient is eligible for full input tax credit. (AI Summary)
Guarantees provided by holding companies to subsidiaries or directors personally to companies qualify as taxable supplies under Schedule I when made in the course or furtherance of business; such guarantees are classifiable as financial services. If no fee is charged, valuation must follow the GST valuation hierarchy: open market value, value of like goods or services, or resort to cost based and residual valuation methods; invoice value may be deemed open market value where the recipient is eligible for full input tax credit. (AI Summary)