Starting October 23, 2023, the Goods and Services Tax (GST) will be levied on corporate guarantee fees at a rate of one percent per annum of the guaranteed loan amount. This decision follows the 53rd GST Council meeting where the Centre notified several changes regarding corporate guarantee services.
The Council's decision allows the invoice value to be considered as the taxable value for corporate guarantee services between related entities. This benefits recipients eligible for full input tax credit.
Previously, the Council had determined that the fee for issuing a corporate guarantee should be either 1% of the guarantee's value or the actual amount charged, whichever is higher. The enforcement notification in October 2023 mandated an 18% GST rate on corporate guarantees between parent companies, subsidiaries, and related parties.
Additionally, the Centre set limits on appeal fees in the GST Appellate Tribunal, capping the maximum fee at Rs 25,000 and the minimum fee at Rs 5,000.
Furthermore, the Centre introduced provisions enabling rectification of monthly and quarterly GST returns, aiming to resolve discrepancies between GSTR-1 and GSTR-3B filings and streamline routine reconciliation processes for businesses.
These changes mark efforts to clarify and streamline GST regulations, ensuring compliance and reducing disputes within the tax framework.
PM Modi Holds Key Meeting with Economists Ahead of 2024 Budget
These Sectors Expected to Be in Focus During Budget 2024
Budget 2024 Expectations: Nirmala Sitharaman Set to Present on July 23