RCM ON CORPORATE GUARANTEE

[ajay chharia]

Dear Sir,

corporate guarantee provided by overseas holding company. As per the CBIC order, 18% GST will apply to corporate guarantees between parent and subsidiaries and other related parties either on the financial consideration charged by the guarantor for that service, or 1% of the value of the guarantee, whichever is higher.

Guarantee was provided in 2017-18, after july,2017

1.whether RCM to be paid on 1% value of Guarantee for 2017-18,

2.If yes, whether liable for interest even when valuation rule was not available till 26th oct,2023

3.Whether ITC can be availed in current year?

pl note:my company is not eligible for 100% ITC

AI Summary

Debate on GST Applicability & Reverse Charge Mechanism for Overseas Corporate Guarantees: Prospective vs. Retrospective Application A discussion on a forum addresses the applicability of Goods and Services Tax (GST) on corporate guarantees provided by an overseas holding company to its subsidiary. The issue revolves around whether the Reverse Charge Mechanism (RCM) applies to 1% of the guarantee's value for the 2017-18 period and if interest is due given the valuation rule was established only in October 2023. Responses indicate that the CBIC order is prospective, and there is debate on whether the current circular can be applied retrospectively. The discussion also touches on the potential for litigation regarding the supply classification and valuation rules.