GST Circular No. 265/11/2026
The CBIC, based on the recommendations of the 57th GST Council Meeting held on 8 October 2026, has issued Circular No. 265/11/2026 with following clarifications under Section 168(1) of the CGST Act, 2017, to ensure uniformity in classification and applicability of GST rates.
Sublimation Paper – GST Rate 18%
The CBIC has clarified that sublimation paper is classifiable under HSN 4809 and attracts GST at 18%, as specified under Serial No. 176 of Schedule II of Notification No. 09/2025-Central Tax (Rate), dated 17 September 2025, instead of sub-heading 4810 22.Further, to resolve past disputes relating to classification and applicable GST rates, the GST Council has recommended regularisation of the past period on an “as is where is” basis.
Classification and GST Rates of Toys
The CBIC has clarified that the GST rates specified under Serial No. 497 of Schedule I and Serial No. 616 of Schedule II of Notification No. 09/2025-Central Tax (Rate), dated 17 September 2025, apply to all toys covered under HSN 9503 and are not restricted only to tricycles, scooters, pedal cars and similar wheeled toys.Accordingly, non-electronic toys, including their parts and accessories, are taxable at 5% GST, while electronic toys, including their parts and accessories, are taxable at 18% GST.
The clarification further specifies that the term “etc.” includes other categories of toys covered under HSN 9503, such as dolls’ carriages, dolls, other toys, reduced-size (scale) models, similar recreational models (whether working or not) and puzzles of all kinds.
ITC Eligibility under Margin Scheme for Old and Used Motor Vehicles
The CBIC has clarified that the restriction on claiming Input Tax Credit (ITC) under the concessional GST and Compensation Cess provisions of the Margin Scheme applies only to the tax paid on the purchase of old and used motor vehicles.
Accordingly, dealers dealing in old and used motor vehicles can claim ITC on other goods and input services used in their business, such as spare parts, repair and maintenance services, technology services, rent, marketing and advertisement services, subject to the applicable provisions of the CGST Act, 2017.
This clarification applies to the Margin Scheme under Notification Nos. 08/2018-Central Tax (Rate), 09/2018-Integrated Tax (Rate) and 01/2018-Compensation Cess (Rate), dated 25 January 2018.
Classification of Seaweed Extract-Based Bio-stimulants – GST Rate 5%
The CBIC has clarified that seaweed extract-based bio-stimulants registered under Schedule VI of the Fertiliser (Inorganic, Organic or Mixed) (Control) Order, 1985, are classifiable under HSN 3101 as fertilisers, rather than under HSN 3808 as plant-growth regulators.
Accordingly, such products attract GST at 5% under Serial No. 237 of Schedule I of Notification No. 09/2025-Central Tax (Rate), dated 17 September 2025. The clarification has also been incorporated through an explanation inserted in the relevant notification entry.
Further, to resolve past classification disputes, the GST Council has recommended regularisation of the past period on an “as is where is” basis.
