New GST Rules Define Taxability and Valuation for Corporate Guarantees Among Related Parties Effective October 26, 2023.

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....This trade circular clarifies various issues related to taxability and valuation of supply of services involving corporate guarantees provided between related persons. Key points are: Corporate guarantees issued before 26.10.2023 will be valued as per pre-amended rules, while those issued/renewed after will follow the new sub-rule (2) of Rule 28. Valuation is based on the guaranteed amount, not the actual loan disbursed. For co-guarantors, GST is payable proportionately on 1% of respective guaranteed amounts. For intra-group guarantees, GST is payable under forward charge by the guarantor entity. For guarantees of fixed tenure, 1% of guaranteed amount per annum or actual consideration, whichever is higher, is the taxable value. The second p.........