Government of India
Ministry of Finance
Department of Revenue
North Block, New Delhi,
Dated the 17th June, 2021
The Principal Chief Commissioners/ Chief Commissioners/ Principal
Commissioners/ Commissioner of Central Tax (All) /
The Principal Director Generals/ Director Generals (All)
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.
Technical Officer (TRU)