GST on corp guarantee: Realtors seek revision

'GST should be either on actual or 1% of guarantee, whichever is lower' providing the corporate guarantee, whichever is higher.

- MONIKA YADAV

This means that GST will be applicable on guarantees between related parties, even if the subsidiary company cannot claim full input tax credit. The proposed rule determines the value for taxation purposes based on this valuation.

REAL estate developers have made representation before Finance Minister Nirmala Sitharaman to make amends in the recent circular of imposing 18% GST on corporate guarantees given by related parties, as per government sources.

"As per developers, 18% GST should be imposed on either actual consideration or 1% of the guarantee amount, whichever is lower," a highly placed source said. Notably, as per the circular, the consideration value on which the GST will be levied is higher of either the actual payout or 1% of the loan amount.