Waiver of guarantee fee procedure thereof - Income Tax - [F. No. 12(10)-B(SD)/2009]

[F. No. 12(10)-B(SD)/2009] Office Memorandum Dated 18-03-2014 Subject: Waiver of guarantee fee procedure thereof The undersigned is directed to state that Ministry of Finance has been approving guarantee with waiver of guarantee fee either in full or part. As per the extant rules, Guarantee fee is leviable at 1.2 per cent. in respect of external borrowings and at 1 per cent. in respect of domestic borrowings. Guarantee fee is payable in advance every year by the public sector undertaking whose loan are guaranteed by Government of India. 2. Waiver of guarantee fee is an expenditure of the Government of India as it represent revenue foregone. Therefore, the same has to be classified in the Government account be debiting the appropriate account head and assuming contract receipt under the receipt head. For this purpose approval of Parliament seeking appropriation towards expenditure is essential. 3. In the context of the above, it is seen that some of the Ministries/Department are not seeking prior approval of Parliament to regulate the waiver of guarantee fee in full or part. It is, therefore, requested that in future all the Ministries/Departments may kindly regulate the waiver of guarantee fee by obtaining Parliament s approval either by making necessary budgetary provision in the Expenditure Budget for the year or by obtaining Supplementary Budget otherwise. 4. Receipt of this letter may be acknowledged. (Sd.) . . . . . . . . Dr. Rajat Bhargava, Joint Secretary (Budget) [F. No. 12(10)-B(SD)/2009]