GST clarifications on toys, used-vehicle margin scheme, sublimation paper and bio-stimulants
What changed. Based on the recommendations of the 57th GST Council meeting (8 October 2026), CBIC has clarified:
- Toys. S. No. 497 of Schedule I (5%) and S. No. 616 of Schedule II (18%, electronic toys) of Notification No. 09/2025–Central Tax (Rate) are not limited to tricycles, scooters and pedal cars. "Etc." covers all toys under heading 9503, including dolls, scale models and puzzles.
- Margin scheme for used vehicles. The bar on input tax credit (ITC) applies only to tax paid on the second-hand vehicles bought. Dealers may take ITC on other inputs and input services, such as spares, repairs, technology services, rent and advertising, subject to the CGST Act.
- Sublimation paper. Classifiable under heading 4809, at 18% (S. No. 176 of Schedule II). The past period is regularised on an "as is where is" basis.
- Sea-weed extract bio-stimulants. Those registered under Schedule VI to the Fertiliser Control Order, 1985 fall under heading 3101 (S. No. 237 of Schedule I). The past period is regularised on an "as is where is" basis.
Who it affects. Toy makers and sellers, used-car and used-vehicle dealers, makers and buyers of sublimation paper, and fertiliser and agri-input businesses.
From when. The circular is dated 28 October 2026.
What to do. Used-vehicle dealers should review ITC on business expenses that was not claimed earlier, within the time limits of the CGST Act. Toy businesses should check the rate applied to their products. Businesses with pending notices on these classification issues can rely on the circular in their replies.
Official source: CBIC Circular No. 265/11/2026-GST dated 28 October 2026
This is general information based on the law as on the date shown, not professional advice. Rules change often; check the current position before acting.