GST on Corporate Guarantee Payable only Once Under Reverse Charge Mechanism: AAR

The Authority for Advance Rulings (AAR) has ruled that GST on corporate guarantees is payable only once under the reverse charge mechanism. The case involved a corporate guarantee provided by an Indian company to its subsidiary. The AAR clarified that the supply of a corporate guarantee is a taxable service under GST, and the recipient of the service is liable to pay GST under the reverse charge mechanism. The ruling emphasized that GST is payable only once on the value of the corporate guarantee, regardless of the number of transactions or the duration of the guarantee. This decision provides clarity on the tax treatment of corporate guarantees and ensures that taxpayers are not subject to multiple GST liabilities for the same service.