S Limited and T Limited are related persons. S Limited issued a corporate guarantee to City Bank on behalf of T Limited for availing a working capital loan of ₹1 crore, for a period of 18 months further extendable on ren

Answer 3(b) The recent amendment to Rule 28 by introducing new sub-rule (2) of the CGST Rules by Notification No.52/2023 applicable retrospectively from October 26, 2023, introduced a specific provision regarding the valuation of corporate guarantees (CG) when provided between related parties. This change, specifies that the value of a corporate guarantee for GST purposes should be calculated as either 1% of the guaranteed amount per annum or the actual consideration received, whichever is higher. Thus, in the question, the value of supply will be: 1% of the guaranteed amount per annum = ₹1 Crore * 1% /12 * 18 months = ₹1,50,000 or the actual consideration received = ₹2,00,000 whichever is higher = i.e. ₹2,00,000 Note: The word per annum inserted vide Notification No. 12/2024-CT dated 10.07.2024, applicable retrospectively w.e.f. 26.10.2023. Alternative Answer 3(b) The recent amendment to Rule 28 by introducing new sub-rule (2) of the CGST Rules by Notification No.52/2023 applicable retrospectively from October 26, 2023, introduced a specific provision regarding the valuation of corporate guarantees (CG) when provided between related parties. This change, specifies that the value of a corporate guarantee for GST purposes should be calculated as either 1% of the guaranteed amount or the actual consideration received, whichever is higher. Thus, in the question, the value of supply will be: 1% of the guaranteed amount = ₹1 Crore * 1% = ₹1,00,000 or the actual consideration received = ₹2,00,000 whichever is higher = i.e. ₹2,00,000