GST council likely to levy 18% GST on personal guarantee loans
The GST Council Meeting, as reported on October 9, 2023, resulted in a significant decision regarding Goods and Services Tax (GST) in India. It was determined that corporate guarantees provided by a company’s director would not be subject to GST. However, in cases where a holding company issues a corporate guarantee, a GST rate of 18% would be imposed on the entire guaranteed amount by the parent company.
Moreover, the GST Council also took action to reduce the GST rate on molasses from 18% to 5% and provided an exemption on alcohol meant for human consumption from GST taxation. This move is expected to have an impact on the alcohol industry in India.
JK Arora, Chairman of Som Distilleries, emphasized that the GST Council’s clarification regarding the taxation of alcohol is in line with the Indian constitution, which stipulates that the manufacturing, storage, transport, and licensing of liquor fall under the purview of the state. As such, the GST Council cannot levy taxes on alcohol as it is within the state’s jurisdiction. He expressed optimism that this clarification would resolve many ongoing litigations related to alcohol taxation.
In summary, the GST Council Meeting addressed corporate guarantees and the taxation of alcohol, providing clarity on these matters and potentially reducing legal disputes in these areas.
#GSTCouncil #Taxation #CorporateGuarantees #AlcoholTax #IndianEconomy