GST on Bank Guarantee between two unrelated Indian Companies.

[KALLESHAMURTHY MURTHY K.N.]

Sirs, 

Company “A” has provided a Bank guarantee with Citibank Dubai to an unrelated Company “B”. Both are situated in India. The bank guarantee is either for consideration or without consideration. Whether GST is payable, and if so, what tax, whether IGST or CGST+SGST and who is liable to pay tax?

AI Summary

Bank guarantee GST treatment: recipient in India liable to pay IGST under reverse charge for imported financial services.
Where a bank guarantee is issued by a provider located outside India and the recipient is in India, the transaction is treated as an import of service with the place of supply at the recipient's location; consequently, the Indian recipient is liable to discharge IGST under the reverse charge mechanism, subject to the presence of consideration for the guarantee.