The directorate general of goods and services tax intelligence (DGGI) has sent tax demand notices to several local corporate houses over corporate guarantees given on behalf of their subsidiaries, and to multinationals where they have given such guarantees for their Indian units. In the case of MNCs, tax authorities are seeking GST dues from the local unit under the reverse charge mechanism. “We have discovered that some companies were not paying tax on the corporate guarantee extended by them which is liable for tax under the GST during the audit and so tax demand has been raised as per the law,” a senior official told ET. While the tax demand amount is not very high, companies that received such notices have raised objections and are seeking legal opinion, sources said. Officials estimated the cumulative sum of demand notices sent in the last two months to be Rs 600-700 crore.

Source: Economic Times July 17, 2023 08:30 UTC