Circular
28 Oct 2026
CBIC
Operative & In Force
265/11/2026-GST. — Clarification regarding classification and applicability of GST on the supply of certain goods based on the recommendations of the GST Council in its 57th meeting held on 8th October 2026, at New Delhi
Legal Citation
CBIC Circular No. 265/11/2026-GST., dt. 28-10-2026
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Executive Directive & Regulatory Background
This CBIC Circular No. 265/11/2026-GST, dated 28th October 2026, provides crucial clarifications on GST classification and applicability for specific goods, stemming from the 57th GST Council meeting.
Key Statutory Takeaways & Compliance Mandates
01
Objective & Uniformity of Implementation
Issued under Section 168(1) of the CGST Act, 2017, its primary purpose is to ensure uniformity in GST implementation and resolve existing ambiguities and past disputes.
02
Classification & Tax Rate Applicability
The circular clarifies the classification of Sublimation Paper (under HSN 4809 at 18% GST) and Sea-weed Extract Based Bio-stimulants (under HSN 3101 at 5% GST if registered under the Fertiliser Control Order).
03
Classification & Tax Rate Applicability
Significantly, it broadens the scope of 'Toys' under HSN 9503 to include all categories, not just wheeled toys, for both 5% (non-electronic) and 18% (electronic) GST rates.
04
It provides a major relief under the Margin Scheme for old and used motor vehicles, allowing ITC on all inputs and input services except the procured second-hand vehicles themselves.
05
For past disputes concerning Sublimation Paper and Sea-weed Extract Based Bio-stimulants, the Council has recommended regularization on an 'as is where is' basis, offering retrospective relief.
06
Applicability & Compliance Framework
These clarifications are effective from the date of the circular, with retrospective regularization for specific items.
Key Procedural Changes & Industry Impact
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Sublimation Paper is classified under HSN 4809, attracting 18% GST. Past disputes are to be regularized on an 'as is where is' basis.Clearer classification for manufacturers/dealers of sublimation paper, ensuring consistent tax treatment and resolution of past litigation without additional liability.
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The scope of 'Toys' under HSN 9503 (5% for non-electronic, 18% for electronic) is expanded to include all categories of toys, not just those specifically enumerated (e.g., tricycles, scooters).Eliminates ambiguity for toy manufacturers and retailers, ensuring a broader range of toys receive the intended concessional or standard GST rates, preventing inconsistent interpretations by field formations.
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Under the Margin Scheme for old and used motor vehicles, ITC can now be availed on all inputs (other than the second-hand vehicles themselves) and input services (e.g., spares, repairs, marketing).Significant financial relief for dealers of used motor vehicles, allowing them to offset GST paid on operational expenses, thereby improving profitability and reducing the effective cost of doing business under the scheme.
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Sea-weed extract based bio-stimulants, if registered under Schedule VI to the Fertiliser (Control) Order, 1985, are classified under HSN 3101 (5% GST). Past disputes are to be regularized on an 'as is where is' basis.Provides clarity and a concessional GST rate for specific bio-stimulants, benefiting agricultural input suppliers and farmers. Retrospective regularization offers relief from past tax demands.