GST Council recommends Retrospective Amendment to CGST Rule 28(2) on Corporate Guarantee Services: Know Retrospective Date

The 53rd meeting of the GST Council, chaired by Union Finance Minister Nirmala Sitaraman, recommended the retrospective amendment of rule 28(2) of the CGST Rules, effective from 26th October 2023. The amendment aims to clarify various issues regarding the valuation of services providing corporate guarantees between related parties. The amendment specifies that the valuation under rule 28(2) would not apply in cases of such services' export or where the recipient is eligible for full input tax credit (ITC). This means that the value declared in the invoice for these services will be considered the open market value, simplifying compliance for related party transactions or transactions between distinct persons, provided the recipient can claim full ITC. The amendment seeks to streamline the valuation process for these transactions by accepting the invoice value without the need for further adjustments or valuations.\r

The amendment addresses concerns related to the valuation of services providing corporate guarantees between related parties, ensuring that the invoice value is accepted as the open market value when the recipient is eligible for full ITC. This simplifies the compliance process for such transactions, providing clarity and consistency in valuation methods. Additionally, the retrospective nature of the amendment ensures that it applies from 26th October 2023, avoiding any confusion or discrepancy in the valuation of these services.