2026-VIL-22-AAR
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SGST Advance Ruling Authority

GST - Andhra Pradesh AAR - Exemption from GST on Guarantee Commission – Applicant raised fund from the debt market for which the Government of Andhra Pradesh provided guarantees. The applicant is liable to pay a 5% guarantee commission to the State government on the value of the guarantee - Whether the guarantee commission payable by Applicant to the State Government, in respect of guarantees provided for the issuance of bonds, qualifies for exemption from levy of GST under Entry No. 34A of Notification No. 12/2017–Central Tax (Rate), as amended - HELD - The Entry No. 34A of Notification No. 12/2017–Central Tax (Rate), as amended, exempts services supplied by the State Government to its undertakings by way of guaranteeing the loans taken by such undertakings. The CBIC Circular No. 154/10/2021-GST dated 17.06.2021 also clarified that guaranteeing of loans by the State Government for its undertakings is specifically exempt under the said entry. Since applicant is a State Government undertaking and the guarantees are provided by the State Government for its borrowings, the guarantee commission paid by the applicant is eligible for the exemption - The guarantee commission payable by applicant to the Government of Andhra Pradesh, in respect of guarantees provided for the issuance of bonds, qualifies for exemption from levy of GST under Entry No. 34A of Notification No. 12/2017–Central Tax (Rate), as amended by Notification No. 14/2018–Central Tax (Rate) dated 26.07.2018, read with Circular No. 154/10/2021 dated 17.06.2021 – Ordered accordingly
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