![52nd GST Council Meeting: Ministry of Finance Notifies 18% GST 52nd GST Council Meeting: Ministry of Finance Notifies 18% GST](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiPIIQtf77FgVA02-ZhwSuPs_8npWHZJs05OA59937UX2SFeX4w00RUyYWXvsVIfute3CQuGWE3Tf4JGtuqDfkNCEJ_jTDn7ldu5QtWmMTQG6IGJCUoaXH-l6Mcps5B_KR5CtyKIhyIfZ1x4JtbEWdgVTDmodmYOmlbE5RsQB6kfZrW4Pvxl0eqMhnod6Gm/w320-h192-rw/20210513191733_fnn.jpg)
- The new rule applies to transactions involving Corporate Guarantees provided on or after 26th October 2023.
- This notification was issued following the recommendations of the 52nd GST Council meeting held on 7th October, 2023.
- A corporate guarantee is a promise made by one entity (the guarantor) to pay the debt or perform the obligation of another entity (the borrower) in case of default.
- Corporate guarantees are often issued by parent companies for their subsidiaries or by group companies for each other.
- The notification specifies that the 18% GST will apply to corporate guarantees between parent and subsidiary 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. However, personal guarantees offered by the promoters or directors of the company in their individual capacity shall not attract GST.
Question:
Q.1 What is the GST rate on guarantees provided by corporates to their subsidiaries as per the 52nd GST Council Meeting?a. 5%
b. 12%
c. 18%
d. 28%