Transitional Credits for Pre-GST Imports: The Ultimate Compliance Guide

Published on May 17, 2025 | Updated weekly

Key Takeaways

  • Transitional credit allows carry-forward of pre-GST import duties (CVD/SAD) paid before July 1, 2017
  • Form GST TRAN-1 must be filed with supporting documents to claim these credits
  • Only 90% of eligible credit can be initially utilized under Rule 117
  • Proper documentation is critical to avoid rejection of claims

Understanding Transitional Credit Mechanism

The Goods and Services Tax (GST) implementation on July 1, 2017 introduced transitional provisions allowing businesses to migrate existing tax credits from the pre-GST regime. This includes:

Credit Type Covered Duties Documentation Required TRAN-1 Table
Input Stock Credit CENVAT, VAT, Entry Tax Last returns, stock registers 5(b), 5(c)
Import Duty Credit CVD, SAD, Anti-dumping Bills of Entry, payment proofs 4
Capital Goods Credit Excise, Additional Duty Asset registers, depreciation schedules 6

Legal Basis

Section 140 of the CGST Act and Rule 117 of CGST Rules govern transitional credit claims. The CBIC has issued 42 clarifications through various circulars, most notably Circular No. 182/14/2022-GST dated November 10, 2022.

Step-by-Step Claim Process

1

Eligibility Assessment

Verify which pre-GST credits qualify based on:

  • Stock position as of June 30, 2017 midnight
  • Duty payment proofs for imports
  • Unutilized balances in last returns
2

Document Compilation

Gather mandatory documents:

Bills of Entry
Duty Payment Challans
Stock Registers
Last Returns (ER-1/ST-3)
3

Form TRAN-1 Preparation

Complete all relevant tables with:

  • Accurate credit amounts
  • Proper classification
  • Supporting annexures
4

Portal Submission

File within specified timeframe:

  • Initial deadline was December 27, 2017
  • Multiple extensions granted via court orders
  • Check current status on GST portal

Common Rejection Reasons & Solutions

1. Nil Balance Rejection

Cause: Blank tables or missing "0" entries

Solution: Populate all tables even with zero values

2. Documentation Errors

Cause: Incomplete/mismatched supporting documents

Solution: Create cross-referenced document index

3. Return Filing Status

Cause: Incorrect "returns filed" declaration

Solution: Verify all pre-GST returns were filed

4. Time Barred Claims

Cause: Missed extended deadlines

Solution: Check latest CBIC notifications

Important Judicial Precedents

  • Filco Trade Centre Pvt. Ltd. (2022): Extended TRAN-1 filing deadline
  • Adfert Technologies Pvt. Ltd. (2020): Clarified credit eligibility
  • Brand Equity Treaties Ltd. (2021): Established documentation standards

Credit Utilization Strategy

Initial Utilization

Maximum 90% of eligible credit can be utilized immediately as per Rule 117(4)

Balance 10% Utilization

Remaining credit becomes available after:

  • Verification by tax authorities
  • Submission of additional documents if requested
  • Expiry of 6-month review period

Priority Utilization

Recommended order for credit use:

  1. IGST on imports
  2. CGST/SGST liabilities
  3. Interest/penalty payments

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