IGST Credit Rules Explained & Relief Expected via CBIC SOP

IGST Credit Rules, TR-6 Challan, Bill of Entry

When it comes to claiming IGST input tax credit on imports under the GST regime, documentation plays a critical role. Many Indian businesses, especially those involved in imports requiring reassessment or re-computation on IGST payable due to various goods reclassification issues, shortfall of IGST payments though TR-6 challans etc.

Recent IGST credit rules and clarifications have made it clear that not all documents are treated equally when it comes to availing IGST credit. This article explains the difference between a TR‑6 challan and Bill of Entry, and why understanding this distinction is essential for claiming IGST input tax credit correctly.

What Is a TR-6 Challan and When Is It Used?

TR-6 challan is used to make payment of Customs duties (including IGST on imports), Fines or penalties and Duties collected by DRI, Customs (Prev.), SEZ units, etc. While it’s a valid mode of payment under customs procedures, the challan is not integrated into the GST portal.

This means any IGST paid via TR-6 does not automatically reflect in the GST system and therefore the data linkage required for input tax credit eligibility under GST law.

The Bill of Entry: A Recognized Document for ITC

The Bill of Entry is the formal import declaration filed electronically with Indian Customs through ICEGATE. It plays a dual role:

Facilitating customs clearance
Providing the necessary basis for IGST input credit under GST law

Since the Bill of Entry is electronically linked to GSTN, the IGST paid at the time of import gets reflected in GSTR-2A/2B. This satisfies the documentary requirement under Section 16(2) of the CGST Act, read with Rule 36 of the CGST Rules, which governs ITC claims.

Key Differences Between TR‑6 Challan and Bill of Entry

While both documents are tied to IGST payments, their treatment under GST differs significantly:

Aspect	TR-6 Challan	Bill of Entry
Linked to GST Portal	No	Yes
Auto-reflected in GSTR-2A/2B	No	Yes
Accepted under Rule 36	No	Yes
Common Usage	SVB reassessment or post-clearance	Standard import declaration
Valid for ITC Claim	No	Yes

What the Tamil Nadu AAR Ruled

In a notable case, the Tamil Nadu Authority for Advance Ruling (AAR) examined whether IGST paid through a TR‑6 challan due to SVB reassessment was sufficient to claim ITC under GST.

The AAR concluded that:

A TR‑6 challan is not one of the prescribed documents for ITC under Rule 36
It is not transmitted to the GSTN, and
Therefore, IGST credit cannot be claimed solely based on a TR‑6 challan

This ruling reinforces the principle that electronic traceability and document compliance are essential under GST.

This ruling has major implications for importers who rely on TR‑6 challans after reassessment. From a legal standpoint, claiming ITC on the basis of a TR‑6 challan may be considered non-compliant and could lead to credit denial during audits. It’s important to note that even if the IGST has been paid through a TR‑6 challan, input tax credit can only be availed once a reassessed Bill of Entry is issued and uploaded in the GST system.

Implications for Importers and Tax Teams

This clarification has important compliance implications for importers:

Even if IGST is validly paid using a TR‑6 challan, credit cannot be claimed unless backed by a reassessed Bill of Entry
Claiming ITC without a valid document could result in credit denial during audits or departmental scrutiny

Relief in Sight for Importers on IGST Credits?

While current GST rules do not allow input tax credit on TR‑6 challan payments, there are signs of policy-level changes that may offer relief. The Central Board of Indirect Taxes and Customs (CBIC) is working on a Standard Operating Procedure (SOP) to resolve this long-standing gap in IGST credit eligibility.

Often, importers pay IGST shortfalls via TR-6 challans due to issues like:

Valuation differences
Product misclassification
Post-clearance reassessment by authorities like the SVB

However, since TR-6 payments are not electronically linked to the GSTN, they are not reflected in the Bill of Entry or GST returns — resulting in ineligibility for input tax credit.

The proposed SOP is expected to:

Enable linking of TR‑6 challan data to Bills of Entry
Ensure automatic reflection in the GST system
Allow credit to be claimed on post-clearance payments
Reduce manual intervention, disputes, and delays

According to the Business Standard report (8 July), this move could potentially unlock hundreds of crores in blocked ITC and improve working capital positions for many Indian businesses. The SOP also supports a broader policy shift to allow voluntary post-clearance corrections, as outlined in recent Budget announcements. These changes aim to align India’s processes with global tax standards, where post-facto revisions and ITC claims are more flexible.

This development could significantly ease the compliance burden for importers, especially in cases where reassessment is delayed or BoE updates are not feasible in time. Once implemented, it is likely to be a major reform in the way IGST credit is handled for import-related adjustments.

What Should Businesses Do to Remain Compliant?

If your business has made IGST payments through TR‑6 challans, especially after customs reassessment, the correct course of action is as follows:

Wait for the reassessed Bill of Entry to be issued by customs
Ensure that it is electronically submitted and reflected in GST records
Claim IGST input credit only after the BoE is available in GSTR-2A/2B

This approach aligns with current GST laws and ensures that ITC claims are backed by recognized documentation.

Conclusion:

While a TR‑6 challan serves a valid purpose in customs administration, it is not sufficient for claiming IGST input tax credit under the GST framework. The Bill of Entry continues to be the only recognized document for this purpose.

Given the position clarified by the Tamil Nadu AAR and the documentary requirements under GST law, businesses must take care to base ITC claims only on documents prescribed under Rule 36 and Section 16(2). Aligning with these requirements not only ensures compliance but also reduces the risk of credit rejection and future disputes.

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