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CGST circularMedium impact for ecommerce sellers

GST clarifications on toys, sublimation paper, used vehicle margin scheme ITC and sea-weed bio-stimulants

Official text · Summary prepared automatically

Document
Circular No. 265/11/2026-GST.
Issued
28 Oct 2026
Effective
28 Oct 2026
Issued by
Central Board of Indirect Taxes and Customs (CBIC)
Official PDF(opens in a new tab)

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What it means for ecommerce sellers

CBIC Circular No. 265/11/2026-GST clarifies that S. No. 497 of Schedule I (5%, toys other than electronic toys) and S. No. 616 of Schedule II (18%, electronic toys) of notification No. 09/2025-C.T.R. cover all categories of toys in heading 9503, such as dolls, scale models and puzzles, and are not restricted to tricycles, scooters and pedal cars. It also clarifies that sublimation paper falls under heading 4809 attracting 18% GST, that suppliers of old and used motor vehicles under the margin scheme notifications may avail ITC on inputs (other than the vehicles) and input services, and that registered sea-weed extract based bio-stimulants fall under heading 3101. The circular is dated 28 October 2026 and does not state a separate effective date. Online sellers of toys and of sublimation paper are the ecommerce sellers most directly concerned.

Who it affects

  • Suppliers of toys classifiable under heading 9503 of the Customs Tariff Act, 1975
  • Suppliers of sublimation paper
  • Suppliers of old and used motor vehicles under the GST margin scheme notifications
  • Suppliers of sea-weed extract based bio-stimulants registered under Schedule VI to the Fertiliser (Inorganic, Organic or Mixed) (Control) Order, 1985
  • CBIC field formations

Before and after

  • Scope of toy entries S. No. 497 of Schedule I and S. No. 616 of Schedule II

    Before
    Certain field formations interpreted the wording restrictively, excluding categories of toys not expressly enumerated (tricycles, scooters, pedal cars), resulting in ambiguity and inconsistent tax treatment.
    After
    The term "etc." refers to all other categories of toys in heading 9503, such as dolls' carriages, dolls, other toys, reduced-size (scale) models and similar recreational models, working or not, and puzzles of all kinds.

What to do

  1. A seller of toys under heading 9503 would apply S. No. 497 of Schedule I (5%) to toys other than electronic toys and S. No. 616 of Schedule II (18%) to electronic toys, including dolls, scale models and puzzles.
  2. A supplier of sublimation paper would classify it under heading 4809 attracting 18% GST under S.No. 176 of Schedule II of notification No. 09/2025-C.T.R.
  3. A supplier of old and used motor vehicles under the margin scheme notifications would review ITC on inputs (other than the vehicles) and input services such as spares, repairs, technology services, rent, marketing and advertisement, subject to the provisions of the CGST Act, 2017.
  4. A supplier of sea-weed extract based bio-stimulants would check registration under Schedule VI to the Fertiliser (Inorganic, Organic or Mixed) (Control) Order, 1985 before classifying under heading 3101.

Provisions referred to: Section 168(1) of the Central Goods and Services Tax Act, 2017; Heading 4809 and sub heading 4810 22 of the Customs Tariff Act, 1975; Heading 9503 of the Customs Tariff Act, 1975; Headings 3101 and 3808 of the Customs Tariff Act, 1975; S.No. 176 of Schedule II, S. No. 497 and S. No. 237 of Schedule I, and S. No. 616 of Schedule II of notification No. 09/2025-C.T.R. dated 17 September 2025; Notification No. 08/2018-C.T.R., notification No. 09/2018-I.T.R. and notification No. 01/2018-Compensation Cess (Rate) dated 25 January 2018; Schedule VI to the Fertiliser (Inorganic, Organic or Mixed) (Control) Order, 1985

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Official text

As issued by Central Board of Indirect Taxes and Customs (CBIC). Where the text starts with “Extract”, only the parts that concern ecommerce sellers are reproduced; the official PDF (opens in a new tab) is the authoritative version.

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1 Circular No. 265/11/2026-GST F. No. CBIC-190354/142/2026-TRU Government of India Ministry of Finance Department of Revenue (Tax Research Unit) Kartavya Bhavan-I, New Delhi Dated the 28 th October 2026 To, The Principal Chief Commissioners/ Principal Directors General, The Chief Commissioners/ Directors General, The Principal Commissioners/ Commissioners of Central Excise & Central Tax. Madam/Sir, Subject: Clarification regarding classification and applicability of GST on the supply of certain goods based on the recommendations of the GST Council in its 57 th meeting held on 8 th October 2026, at New Delhi - reg. Based on the recommendations of the GST Council in its 57 th meeting held on 8 th October 2026, in exercise of the powers conferred under section 168(1) of the Central Goods and Services Tax Act, 2017, the Central Board of Indirect Taxes and Customs (hereinafter referred to as the Board) hereby clarifies the following issues for the purpose of uniformity in the implementation: 1. Sublimation Paper 1.1 Representations were received seeking clarification whether sublimation paper is classified under heading 4809 or under sub heading 4810 22 of the Customs Tariff Act, 1975. 1.2 Based on the recommendations of the Council, it is clarified that sublimation paper is classifiable under heading 4809 attracting 18% GST (vide S.No. 176 of Schedule II of the notification No. 09/2025-C.T.R. dated 17.09.2025). 1.3 Further, in order to resolve the past disputes regarding the classification and the applicability of GST rate on sublimation paper, the GST Council has recommended to regularise the past period on “as is where is” basis. 2. Toys 2.1 Representations have been received seeking clarification whether all toys classifiable under heading 9503 of the Customs Tariff Act, 1975 are covered under S. No. 497 of Schedule I and S.No. 616 of Schedule II of the notification No. 09/2025-C.T.R. dated 17.09.2025 or the scope of 2 the said entries is restricted only to toys like the ones enumerated therein like tricycles, scooters, and pedal cars. 2.2 The relevant entries in the notification No.09/2025-C.T.R, dated 17.09.2025 are as under: (a) S.No. 497 of Schedule I: Toys like tricycles, scooters, pedal cars etc. (including parts and accessories thereof) [other than electronic toys] (GST Rate of 5%). (b) S.No.616 of Schedule II: Electronic Toys like tricycles, scooters, pedal cars etc. (including parts and accessories thereof) (GST Rate of 18%). 2.3 It was brought to the notice that the wordings in the notification No.09/2025-C.T.R, dated 17.09.2025 were being interpreted in a restrictive manner by certain field formations, leading to exclusion of certain category of toys that are not expressly enumerated therein, thereby resulting in ambiguity and inconsistent tax treatment. 2.4 Based on the recommendations of the GST Council, it is clarified that the scope of S. No. 497 of Schedule I and S. No. 616 of Schedule II of notification No. 09/2025-C.T.R. dated 17.09.2025 is not only restricted to toys like tricycles, scooters, pedal cars, and similar wheeled toys; rather the term “etc.” refers to all other category of toys in the corresponding heading 9503 of the Customs Tariff Act, 1975 such as dolls’ carriages, dolls, other toys, reduced-size (“scale”) models and similar recreational models, working or not, and puzzles of all kinds. 3. Margin Scheme 3.1 Representations were received to clarify whether the condition of non-availment of Input Tax Credit (ITC) for seeking concessional GST and Compensation Cess rate on supply of old and used motor vehicles under the margin scheme notifications i.e. notification No. 08/2018-C.T.R., notification No. 09/2018-I.T.R., and notification No. 01/2018-Compensation Cess (Rate) dated 25.01.2018, is restricted only to the old and used motor vehicles or is applicable to all input goods and input services used in the course of the business in dealing with the said second-hand motor vehicles such as spares, repairs and maintenance services, technology services, rent, marketing and advertisement services, etc. 3.2 Based on the recommendations of the GST Council, it is clarified that the restriction on availment of ITC for availing benefit of concessional GST and Compensation Cess rate under the above-mentioned margin scheme notifications is not applicable in respect of ITC on inputs (other than the said old and used motor vehicles) and inputs services. Accordingly, suppliers of old and used motor vehicles, under the said GST margin scheme notifications, are allowed to avail ITC on various inputs (other than the said old and used motor vehicles) or input services such as spares, repair and maintenance services, technology services, rent, marketing and advertisement services, etc., subject to the provisions of CGST Act, 2017. The restriction on availment of ITC under the said scheme notifications applies only on the tax paid on the procured second-hand vehicles. 3 4. Sea-weed Extract Based Bio-stimulants 4.1 Representations have been received seeking clarification regarding the classification of sea-weed extract based bio-stimulants, that whether such products are classifiable as fertilisers under heading 3101 or as plant-growth regulators under heading 3808. 4.2 Based on the recommendations of the GST Council, it is hereby clarified that sea-weed extract based bio-stimulants, registered under Schedule VI to the Fertiliser (Inorganic, Organic or Mixed) (Control) Order, 1985, are classifiable under heading 3101 (vide S. No. 237 of Schedule I of notification No. 9/2025-C.T.R dated 17.09.2025). The said recommendations have been implemented by inserting an explanation in the said entry at S. No. 237 of Schedule I of notification No. 09/2025-C.T.R dated 17.09.2025. 4.3 Further, in order to resolve the past disputes regarding the classification of sea-weed extract based bio-stimulants, the GST Council has recommended to regularise the past period on “as is where is” basis. 5. Field formations under your charge may be instructed accordingly. 6. Difficulty, if any, in the implementation of this circular may be brought to the notice of the Board. Yours faithfully, (Jainendra Singh Kandhari) Joint Secretary (TRU) Tel: 011-2401 2701

Questions sellers ask

What GST rate applies to dolls and puzzles under Circular No. 265/11/2026-GST?

Circular No. 265/11/2026-GST clarifies that S. No. 497 of Schedule I and S. No. 616 of Schedule II of notification No. 09/2025-C.T.R. dated 17 September 2025 are not restricted to tricycles, scooters and pedal cars. The term "etc." covers all other toys in heading 9503, such as dolls, dolls' carriages, scale models and puzzles of all kinds. S. No. 497 carries 5% for toys other than electronic toys, and S. No. 616 carries 18% for electronic toys.

Is sublimation paper taxed at 18% GST?

Circular No. 265/11/2026-GST clarifies that sublimation paper is classifiable under heading 4809, attracting 18% GST vide S.No. 176 of Schedule II of notification No. 09/2025-C.T.R. dated 17 September 2025, rather than sub heading 4810 22. For past disputes, the circular states that the GST Council has recommended regularising the past period on an "as is where is" basis, but it does not itself set out how that regularisation will be given effect.

Can used car dealers under the GST margin scheme claim ITC on rent and advertising?

Circular No. 265/11/2026-GST clarifies that the ITC restriction under the margin scheme notifications for old and used motor vehicles applies only to tax paid on the procured second-hand vehicles. Suppliers under those notifications may avail ITC on other inputs and input services such as spares, repair and maintenance services, technology services, rent, marketing and advertisement services, subject to the provisions of the CGST Act, 2017. ITC on the second-hand vehicles themselves remains restricted.

How are sea-weed extract based bio-stimulants classified under GST?

Circular No. 265/11/2026-GST clarifies that sea-weed extract based bio-stimulants registered under Schedule VI to the Fertiliser (Inorganic, Organic or Mixed) (Control) Order, 1985 are classifiable under heading 3101, vide S. No. 237 of Schedule I of notification No. 09/2025-C.T.R., and not under heading 3808. An explanation has been inserted in that entry. The circular states the GST Council recommended regularising the past period on an "as is where is" basis.

Want help working out what this means for your business?

We handle GST and TDS compliance, returns and notice replies for D2C and marketplace sellers, and can walk you through how a change applies to your books.

Contact usWhatsApp us

General information only, not professional advice. The summary is ecomca’s reading of the document; the official PDF is the authoritative version, and later amendments may change it. Check the official source before you act.