GST on service supplied by State Govt. to their undertakings or PSUs by way of guaranteeing loans taken by them

Posted on by CMA Bhogavalli Mallikarjuna Gupta

Circular No.154/10/2021-GST dated 17th June 2021

  1. 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.
  1. 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.”
  2. 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