In what could be a big blow for the industry, the upcoming GST Council could levy an 18 percent GST on loans secured by India Inc on bank guarantees. “GST Council is likely to deliberate on the proposal to levy 18 percent GST on corporate guarantee extended by holding cos/ subsidiaries.” sources told CNBC-TV18.
Similarly, the council is also likely to “deliberate on levying 18 percent GST on personal guarantee given by promoters/ directors against loans given by banks.”
According to sources, this view has come up keeping in mind that the “council nominated law committee had come across such cases and the law committee is of a view that extending corporate/personal guarantee is a related party transaction and is considered as a supply. And supplies are treated at 18 percent GST.”
“For ease in valuation council likely to consider bank commission as standard basis to calculate GST liability,” sources said.
It was in 2018 when these two scenarios were clarified for 18 percent GST in case of PSUs and now the council is likely to clarify the same for all, that is all industries, and not just PSUs.
Source: CNBC TV 18
https://www.cnbctv18.com/economy/gst-council-18-gst-on-loans-secured-via-corporate-guarantees-sources-17949321.htm
https://www.cnbctv18.com/economy/gst-council-18-gst-on-loans-secured-via-corporate-guarantees-sources-17949321.htm
