Corporate Guarantee

[SATYANARAYAN MUDAKANNAVAR]

Dear Sir, How to over come the accounting part of GST on corporate guarantee and do avail ITC in subsidiary company as per the Circular No 225/19/2024-gst dated 11/07/2024. Is corporate guarantee covered RCM under GST and claim as ITC.

Please do the needful answer.

Satyanarayan H M

 

[Raam Srinivasan Swaminathan Kalpathi]

Your query is incomprehensible.  Kindly redraft.  Thanks

[Shilpi Jain]

If you are recipient of guarantee from an Indian entity then you are not liable to pay under RCM.

You can claim ITC subject to other conditions inthe law.

Account only the GST charged by the guarantor in your books and not the 1% amount mentioned in the invoice.

AI Summary

Reverse charge mechanism not triggered for corporate guarantees from Indian entities; input tax credit may be claimed subject to conditions. Where a guarantee is received from an Indian entity, the recipient is not liable under the reverse charge mechanism; the recipient should account only for the GST charged by the guarantor in its books. Input tax credit on GST paid in relation to a corporate guarantee may be claimed subject to other conditions and restrictions under the law and applicable guidance.