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GST Updates

GST Valuation of Corporate Guarantees Under Rule 28(2) — Practical Compliance Guide

Published 19 Aug 2026· Updated 25 Aug 2026· 2 min read

Executive Summary

With this cycle’s Gujarat High Court development (Article 2) reportedly confirming that Rule 28(2)’s corporate-guarantee valuation regime cannot be applied retrospectively to guarantees predating 26 October 2023, this guide sets out a practical checklist for reviewing a corporate group’s related-party guarantees.

Step 1 — Inventory Every Related-Party Guarantee by Issue Date

List every corporate guarantee currently in force between related parties (parent-subsidiary, sister companies, promoter-entity), noting the original issue date and whether it has been renewed, amended, or continued since.

Step 2 — Segregate Pre- and Post-26 October 2023 Guarantees

Guarantees issued and continuing from before 26 October 2023 are the ones potentially affected by this cycle’s development on retrospective application. Guarantees issued or renewed on or after that date remain squarely within Rule 28(2)’s valuation regime and should be complied with prospectively regardless of this development.

Step 3 — Review Any Existing Demand or Notice Against the Guarantee’s Issue Date

Where a GST demand, show cause notice, or assessment values a guarantee for a period before 26 October 2023, flag it as a candidate to challenge on retrospective-application grounds — pending confirmation of the primary order and its precise scope.

Step 4 — Confirm the Primary Source Before Filing Anything

Because the case citation for this cycle’s development has not yet been independently confirmed, treat Steps 1–3 as preparatory only. Confirm the actual case name, citation, and precise holding before citing this development in any filing, notice reply, or formal advice.

Why It Matters

Corporate guarantees are a routine, high-value feature of group financing, and Rule 28(2) valuation demands — particularly retrospective ones — can involve significant amounts across a decade or more of guarantee history. A disciplined inventory-and-segregation exercise now positions a group to respond quickly once the primary source is confirmed.

Key Takeaways

  • Rule 28(2) was inserted with effect from 26 October 2023 — there was no specific corporate-guarantee valuation rule before that date.
  • This cycle’s development reportedly bars retrospective application to guarantees predating that date.
  • Guarantees issued or renewed from 26 October 2023 onward remain within Rule 28(2)’s valuation regime.
  • The case citation is not yet confirmed — treat any reliance on this development as provisional until confirmed.

Relevant Sections

  • Rule 28(2), CGST Rules, 2017

Internal Links

  • Gujarat HC: Rule 28(2) Corporate Guarantee Valuation, Retrospective Levy Quashed — /gujarat-hc-rule-28-2-corporate-guarantee-valuation-retrospective-levy-quashed/ (Article 2, this cycle)

Author & Disclaimer

Prepared by Finoscape Editorial Team — contact@finoscape.com. This article is for general informational purposes and does not constitute tax or legal advice. The underlying case citation was not independently confirmed this cycle; readers should confirm the primary source before relying on this guide for a specific matter.

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