LI Network
Published on: October 5, 2023 at 11:01 IST
The Goods and Services Tax (GST) Council is set to make a crucial decision regarding the taxation of corporate and personal guarantees for loans or debt issuances, according to an insider source.
This matter has been a subject of ongoing debate within the country, and the GST Council, comprising the federal finance minister and state finance ministers, is scheduled to deliberate on it during their upcoming meeting on October 7.
Under the proposed plan being considered by the GST Council, an 18% tax would be imposed based on the declared value of the corporate guarantee, or 1% of the guaranteed amount when the commission for the guarantee is unspecified.
In the current financial landscape, companies often provide guarantees to banks on behalf of their holding companies or subsidiaries and charge a fee for this service. The exact fee or commission is determined by various factors, including the firm’s creditworthiness and the guaranteed amount.
Additionally, the council will assess the possibility of exempting certain millet flour products from the current 18% GST rate and will maintain an 18% tax on electric vehicle batteries. Furthermore, the government will examine the taxation of specific services offered by cryptocurrency platforms.
