This article analyses the applicability of GST(if any) on interest paid on loans to foreign-based Parent Company by its subsidiary based in India. Whether such transaction is liable to GST?? Let's look in detail. Section 185 of Companies Act,2013 amended by the Companies (Amendment) Act,2017 prescribes that a holding company can provide loans to its subsidiary company or can provide guarantee or security in respect of any loan made by any bank or financial institution to its subsidiary company provided that these loans are utilised by the subsidiary company for its principal business activities. Further, Section 186(7) provided that such loan can't be given at a rate of interest not less than the prevailing yield of 1 year, 3 years, 5 years or 10 years Government Security closest to the tenor of the loan. GST Law is an act focused primarily on Supply of Goods/Services. In order to check the applicability of GST, firstly it is determined whether such a transaction is covered ...
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