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GST on Bank Guarantee given by Directors or Corporates : The Analysis

Press Release - 52nd GST Council Meeting

In corporates, it is quite common to offer personal guarantees to bank by Directors for loans sought by companies or corporate guarantee given by Parent company for loans sought by its subsidiaries. Taxation of GST on such guarantees has been a burning issue as several companies in past has been subjected to GST notices for this. 

Now the GST Council in its 52nd meeting held on 07th Oct 2023 has clarified and proposed certain amendments related to Bank Guarantees given by Directors or Corporates to bank against credit limits or loans. The press release states the following rules.

Clarifications regarding taxability of personal guarantee offered by directors to the bank against the credit limits/loans .......

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Bank Guarantee

Thanks for provide valuable Information, please we require more clarification regarding the above :-

1. GST charge on 1% Consideration on Grantee Amount or outstanding amount
2. 1% Per annum
3. Related Person for corporate guarantee ?
4. GST Invoice on monthly basis on pro-rata of 1% of the guarantee amount per annum or GST invoice to be raise on yearly basis.

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