The recent GST notification clarified that the 1% charge on corporate guarantees between related parties applies yearly, not for each transaction. This is in addition to other notifications issued by the CBIC to implement the recommendations from the 53rd GST Council meeting. Companies can avoid the charge by claiming full tax credit and dealing only with taxable goods and services. However, businesses with even a small portion of exempt income will still face complexities in valuing guarantees for tax purposes. Further guidance may be needed for businesses with mixed taxable and exempt income. New provisions allow manual filing of appeals with a minimum fee of Rs 5,000, offering flexibility for exceptional circumstances and establishing a clear financial threshold for appeals.
Source A2ztaxcorp
