The CBIC has issued Circular No. 265/11/2026-GST dated 28 October 2026, to issue clarifications based on the recommendations of the 57th GST Council meeting, regarding the classification and GST treatment of certain goods.

Key Highlights of the Circular

1. Sublimation Paper — 18% GST: Sublimation paper is classifiable under heading 4809 and attracts GST at 18%. Past disputes regarding classification and GST rate are proposed to be regularised on an “as is where is” basis.

2. Toys — Scope of Entries Clarified: The entries covering toys under S. No. 497 of Schedule I and S. No. 616 of Schedule II to Notification No. 09/2025-Central Tax (Rate) are not restricted to tricycles, scooters, pedal cars and similar wheeled toys. They cover other toys classifiable under heading 9503, including dolls, dolls’ carriages, scale models and puzzles. The applicable GST rates are 5% for covered non-electronic toys and 18% for electronic toys.

3. Margin Scheme for Old and Used Motor Vehicles — ITC Clarification: Dealers supplying old and used motor vehicles under the prescribed margin scheme may avail ITC on eligible inputs, other than the second-hand vehicles themselves, and on input services such as spares, repairs, maintenance, technology services, rent, marketing and advertising, subject to the CGST Act. The restriction on ITC applies to tax paid on the procured second-hand vehicles.

4. Seaweed-Extract-Based Bio-stimulants — Classification under Heading 3101: Seaweed-extract-based bio-stimulants registered under Schedule VI to the Fertiliser (Inorganic, Organic or Mixed) (Control) Order, 1985, are classifiable under heading 3101, covered by S. No. 237 of Schedule I to Notification No. 09/2025-Central Tax (Rate). Past classification disputes are proposed to be regularised on an “as is where is” basis.

The Complete Circular can be accessed at https://cdn.taxo.online/wp-content/uploads/2026/10/circulars_265.pdf