GST Council's Latest Decisions: Corporate Guarantees and Molasses Tax Rates

Corporate guarantees provided to subsidiaries will attract an 18% GST. 2.

The GST Council, chaired by Union Finance Minister Nirmala Sitharaman, reduced the GST rate on molasses from 28% to 5%.

The right to tax Extra Neutral Alcohol (ENA), a raw product for making alcohol for human consumption, has been handed over to the states.

ENA used for human consumption will be exempt from GST, while ENA for industrial use will be taxed at 18%.

The reduction in GST on molasses is expected to benefit sugarcane farmers and expedite the clearance of their dues by leaving more money in the hands of the mills.

It is anticipated that the reduction in molasses GST will lead to a decrease in the cost of manufacturing cattle feed.

When a corporate guarantee is provided by a director to a company, the value of service will be considered zero, and no GST will be applicable.

In the case of a corporate guarantee provided by a company to its subsidiary, GST will be levied at 18% on 1% of the total amount guaranteed by the parent company.

The GST Council also decided to impose a lower 5% tax on millet-based flour when sold in pre-packaged and labeled form. However, flour containing at least 70% millets will attract zero GST when sold loose and 5% when sold pre-packaged and labeled. Additionally, the council capped the maximum age of GST Appellate Tribunal (GSTAT) President at 70 years and members at 67 years, representing a change from the previous age limits of 67 and 65 years, respectively, for the GSTAT President and members.