CBIC Circulars 265 and 266 of 2026: GST on Sublimation Paper, Toys, Used Cars, Bio-Stimulants, Vehicle Leasing and Banking

Update dated 28 October 2026: Following the 57th GST Council meeting of 8 October 2026, CBIC issued two more clarificatory circulars on 28 October 2026: Circular No. 265/11/2026-GST on classification and rates of certain goods, and Circular No. 266/12/2026-GST on six service-related issues. Both are issued under Section 168(1) of the CGST Act.

🗣️ Saral bhasha mein samjhein

• Sublimation paper par 18% GST, purane vivaad "as-is, where-is" basis par khatam.
• Toys ki rate entry sirf tricycle/scooter tak seemit nahi. Dolls, puzzles, models sab shamil.
• Used car margin scheme wale dealer rent, repair, advertisement jaise kharchon par ITC le sakte hain. Rok sirf purani gaadi ki kharid par hai.
• Vehicle leasing mein registration, insurance, FASTag ki recovery bhi taxable value mein judegi.
• Banks ka internal FTP notional interest exempt, NBFC co-lending mein bank ko di gayi services taxable.

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Circular No. 265/11/2026-GST: Goods

1. Sublimation paper

Sublimation paper is classifiable under heading 4809 and attracts 18% under Serial No. 176 of Schedule II to Notification No. 09/2025-Central Tax (Rate). Disputes on whether it falls under 4809 or 4810 22 for the past period are to be regularised on an "as is, where is" basis.

2. Toys under heading 9503

Some field formations had read the rate entries as limited to the toys named in them, such as tricycles, scooters and pedal cars. CBIC has clarified that the word "etc." covers other toys under heading 9503 as well, including dolls, dolls' carriages, puzzles of all kinds and reduced-size scale models.

3. Used motor vehicles under the margin scheme

The ITC bar under Notification No. 08/2018-Central Tax (Rate) and the corresponding IGST and cess notifications applies only to tax paid on the purchase of old and used vehicles. Dealers can claim ITC on other eligible inputs and services such as rent, repairs and maintenance, advertisement, marketing, spare parts and technology services, subject to the CGST Act.

4. Seaweed extract-based bio-stimulants

Bio-stimulants registered under Schedule VI of the Fertiliser (Control) Order, 1985 are classifiable under heading 3101 as fertilisers (Serial No. 237 of Schedule I to Notification No. 09/2025-Central Tax (Rate)), not under 3808. The past period is to be regularised on an "as is, where is" basis.

Circular No. 266/12/2026-GST: Services

1. R&D services against grants: eligible grant-funded research by specified institutions can claim the exemption under Entry 44A of Notification No. 12/2017-Central Tax (Rate) through self-certification.
2. Shipping services: an exemption applies from 1 November 2026, and the past period is regularised.
3. Leasing of motor vehicles: recoveries for registration, insurance, FASTag and other ancillary charges form part of the taxable value of the leasing service.
4. TRAI: the Telecom Regulatory Authority of India is not "Government" for GST purposes.
5. Fund Transfer Pricing in banks: notional interest under internal FTP qualifies for exemption.
6. NBFC co-lending: services provided by NBFCs to banks under co-lending arrangements are taxable on the contractual consideration.

Why These Circulars Matter

Several of these points had led to show cause notices across States. Where a past-period regularisation is allowed, pending notices on the same issue can be closed by relying on the circular. Taxpayers with open proceedings should file a reply citing it at the earliest.

Have a pending notice on any of these issues? Our GST notice reply and appeals team can help. Also check current HSN and SAC rates.