Author: Nishant Singh

Overview There is often ambiguity regarding the taxability of transactions involving the provision of corporate guarantees. A common concern is that, even when the guarantor does not charge any consideration for offering the guarantee, tax laws may still assign a deemed value to such a supply of service. The term ‘corporate guarantee’ has not been defined under the Goods and Services Tax (“GST”) laws. Thereby, reference ought to be made to Section 126 of the Indian Contract Act, 1872, which defines a “contract of guarantee” as a contract to perform the promise, or discharge the liability, of a third person…