RCM ON CORPORATE GUARANTEE, Goods and Services Tax - GST

[ajay chharia]

Dear Sir,

corporate guarantee provided by overseas holding company. As per the CBIC order, 18% GST will apply to corporate guarantees between parent and subsidiaries and other related parties either on the financial consideration charged by the guarantor for that service, or 1% of the value of the guarantee, whichever is higher.

Guarantee was provided in 2017-18, after july,2017

1.whether RCM to be paid on 1% value of Guarantee for 2017-18,

2.If yes, whether liable for interest even when valuation rule was not available till 26th oct,2023

3.Whether ITC can be availed in current year?

pl note:my company is not eligible for 100% ITC

Posts / Replies

[Ganeshan Kalyani]

The applicability is prospective.

[KASTURI SETHI]

I agree with Sh.Ganeshan Kalyani Ji.

(i) The department has already issued SCNs to many assessees prior to the issuance of CBIC Order. The present CBIC Order cannot be implemented retrospectively.

(ii) In view of the effective date, the possibility of dropping the proceedings initiated by the department on this very issue cannot be ruled out.

(iii) Let us wait for such instructions from the CBIC in favour of the assessees.

[Yash Shah]

It has to be on prospective basis and even challenge as to the applicability of the recent circular is not out of context, there remains a pertinent question as to how it is supply in first case is still to face the heat of litigation, also mentioning the valuation rule would solve the problem is what the department may think of but larger question is to put in place the mechanism for such levy and "how" could come next.