GST ON SERVICE SUPPLIED BY STATE GOVERNMENTS TO THEIR UNDERTAKINGS OR PSUs BY WAY OF GUARANTEEING LOANS BY THEM
The Goods and Services Tax Act, 2017 came into force
with effect from 1.7.2017 in
The Central Government has
clarified in Notification No. 154/10/2021-GST dated 17.6.2021 that Entry No. 34A of Notification no. 12/2017-Central Tax (Rate) dated 28.06.2017 exempts “Services supplied by Central Government, State Government, Union territory to their
undertakings or Public Sector Undertakings (PSUs) by way of guaranteeing the loans
taken by such undertakings
or PSUs
from
the banking companies and
financial institutions.”
Hence
the Central Government has decided to accept the recommendations of the GST Council and re-iterated that guaranteeing of loans by Central or State Government for their undertaking or PSU
is specifically exempt under said entry No. 34A.
The relevant Circular is given below for ready reference:
Circular No.154/10/2021-GST
CBIC-190354/36/2021-TRU Section-CBEC
Government of India
Ministry of Finance
Department of Revenue
****
North Block, New Delhi,
Dated the 17th June, 2021
To,
The Principal Chief Commissioners/
Chief Commissioners/ Principal
Commissioners/ Commissioner of
Central Tax (All) /
The Principal Director Generals/ Director Generals (All)
Madam/Sir,
Sub: GST on service supplied by State Govt. to their undertakings or PSUs
by way of guaranteeing loans taken by them –reg.
Certain representations have been received requesting for clarification
regarding applicability of GST on supply of service by State Govt. to their undertakings or PSUs by way of guaranteeing loans. The issue was examined by GST Council in its 43rd meeting held
on
28th May, 2021.
2. Entry No. 34A of Notification no. 12/2017-Central Tax (Rate) dated 28.06.2017 exempts “Services supplied by Central Government, State Government, Union territory to their
undertakings or Public Sector Undertakings (PSUs) by way of guaranteeing the loans
taken by such undertakings
or PSUs
from
the banking companies and
financial institutions.”
3. Accordingly, as
recommended by
the Council, it is
re-iterated that guaranteeing of loans by Central or State Government for their undertaking or PSU
is specifically exempt under said entry No. 34A.
4. Difficulty, if any, in the implementation of this circular may be brought to the
notice
of the Board.
Yours faithfully,
Shashikant Mehta
Technical Officer (TRU) Email:
shashikant.mehta@gov.in