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

Clarification on GST for corporate guarantees: No RCM liability for Indian entities; ITC claimable if conditions met. A participant inquired about handling GST accounting for a corporate guarantee and claiming Input Tax Credit (ITC) in a subsidiary company, referencing a specific GST circular. One respondent found the query unclear, while another clarified that if the guarantee is from an Indian entity, the recipient is not liable under Reverse Charge Mechanism (RCM). ITC can be claimed if other legal conditions are met, and only the GST charged by the guarantor should be recorded, excluding the 1% mentioned in the invoice.