Indirect tax experts are awaiting clarity on the levy of goods and services tax (GST) on corporate guarantees given by Indian companies on behalf of their subsidiaries following a notification issued by the finance ministry in October. The 26 October notification had clarified how much value to be ascribed to a transaction that provides corporate guarantees when there is no financial consideration involved. Earlier, companies did not pay any GST on corporate guarantees as generally no financial consideration is paid for it by the subsidiary. Tax experts seek clarity on the valuation to be ascribed to corporate guarantees in between this period. However, the valuation for corporate guarantees issued before the amendment still remains unclarified as the amendment is prospective,” she said.

Source: Mint February 29, 2024 18:21 UTC