GST Goods Rate and Classification Clarifications: Scrap, Toys, Seeds and Tyres

By CA Sandeep Kanoi Goods and Services Tax Articles October 9, 2026

Summary: The 57th GST Council meeting held on 8 October 2026 recommended changes concerning goods classification, rate and regularisation recommendations, goods-linked transport and vehicle treatment. The Ministry of Finance press release records recommendations and, in some cases, proposals for future circulars, consultation or in-principle approval. It is not itself an amending Act, rule or rate notification. This analysis explains the precise measures described in the release, their relationship with the statutory provisions identified there, and the practical questions that remain unresolved until the implementing instruments are published. Taxpayers should continue to apply the law currently in force and should not change return positions, claim additional credits, discontinue documentation or alter rates merely on the basis of the Council announcement.

Background and legal status

The Council’s 57th meeting concentrated on process reform following earlier rate rationalisation. The press release distinguishes existing portal measures from new statutory or procedural proposals. Council recommendations require the appropriate amendment, notification, rule, circular or portal implementation, as applicable. A suggested implementation date in the release is not proof of commencement.

Goods classification, rate and regularisation recommendations

Changes/ Clarifications in relation to GST rates on Goods and Services: Recommendations relating to goods To clarify that sublimation paper is classified under heading 4809. It has also been decided to regularise the past cases on “ as is where is ” basis. To clarify that the notification entries related to toys in the GST Rate Schedules also covers all other categories of toys (such as dolls, puzzles and other toys) mentioned in heading 9503 in the Customs Tariff Act, 1975 and is not restricted to tricycles, scooters, pedal cars only (

Sr. No. 497 of Schedule I and Sr. No. 616 of Schedule II of notification No. 09/2025-CTR dated 17.09.2025 ). To provide clarity that sea-weed extract based bio-stimulants, which are registered under Schedule VI to the Fertiliser (Inorganic, Organic or Mixed) (Control) Order, 1985, are classifiable under heading 3101 as fertilisers. Further, it has been decided to regularise the past cases on “ as is where is ” basis (Explanation to be inserted in Sr. No. 237 of Schedule I of notification No. 09/2025-CTR).

Press-release recommendation. To clarify that the suppliers of second-hand vehicles, under the GST margin scheme, are allowed to avail Input Tax Credit (ITC) on various inputs (other than second-hand vehicles) or input services such as spares, repair and maintenance services, technology services, rent, marketing and advertisement services, etc. The restriction on availment of ITC under the said scheme applies only on the tax paid on the procured second-hand vehicles.

[notification No. 8/2018-Central Tax (Rate), notification No. 9/2018-Integrated Tax (Rate) and notification No. 1/2018-Compensation Cess (Rate)]. To bring waste and scrap of plastics, electrical and electronics waste and scrap, waste and scrap of tyres, and used cooking oil under Reverse Charge Mechanism (RCM) when the said waste and scrap is supplied by unregistered person to registered person provided that the supplier shall take registration as and when it crosses threshold limit and the recipient who is liable to pay under RCM shall pay tax even if supplier is under threshold. Further Tax Deducted at Source (TDS) @ 2% has been introduced when the said specified waste and scrap is supplied by registered person to registered person (B to B).

To provide clarity on the tax treatment of supply of Psyllium seeds (Isobgul/ Isabgol) by prescribing NIL rate of GST on the same, irrespective of whether the seeds are fresh, chilled, frozen or dried. To correct the anomaly of GST treatment on re-treaded tractor tyres by aligning the GST rate thereon with that applicable on new tractor tyres. To exempt the Compensation Cess not levied by the Canteen Stores Department (CSDs) on two and four wheelers for the period 01.07.2017 to 30.09.2022, and by CSDs and Unit Run Canteens on aerated drinks for the period 01.07.2017 to 31.03.2022.

Legal reading and implementation questions

The recommendation must be tested against the final statutory or delegated instrument: the operative wording, class of eligible persons or supplies, procedural conditions, effective date, and treatment of past periods. Until those elements are notified, this section describes a proposal rather than a presently enforceable entitlement or restriction.

Goods-linked transport and vehicle treatment

To clarify the GST treatment of certain statutory and ancillary recoveries such as registration charges, road tax, insurance and FASTag charges incurred by the lessor which are subsequently recovered from the lessee in connection with the leasing of motor vehicles. Input Tax Credit in the same line of business To allow limited input tax credit in the same line of business, for the supply of restaurant/outdoor catering services, hotel accommodation services for value up to Rs. 7500 per unit per day, and gym/fitness services in the same manner as is currently available for passenger transportation services, tour operator services and renting of motor vehicles services.

Transport of passengers by Helicopters from/to specified states To exempt from GST, the services of passenger transportation by helicopter on seat-sharing basis from/to airports/helipads located in north-eastern states, Sikkim and Bagdogra in West Bengal.

Legal reading and implementation questions

Analysis

Classification proposals must be read against the precise product description and tariff heading, not a commercial label alone. Where the release proposes regularisation of past cases on an “as is where is” basis, the precise legal mechanism and consequences for paid or disputed tax require the relevant implementing instrument. Goods-specific rates and reverse-charge/TDS arrangements should not be applied until the corresponding notification takes effect.

Way forward

First, identify the relevant Act amendment, rule amendment, rate notification or circular when issued. Second, compare its wording with the Council announcement; the final text may narrow, qualify or stage the measure. Third, confirm the commencement clause and any retrospective or transitional provision. Fourth, update compliance procedures only after checking whether portal changes, prescribed forms and administrative instructions are available.

Key takeaways

The 8 October 2026 press release is the primary source for the proposals discussed here.
A recommendation, in-principle approval or proposed circular does not itself change the operative law.
Where the release identifies thresholds, dates or exceptions, the final legal text must be checked before applying them.
Existing statutory filing, payment, record-keeping and appeal obligations continue until lawfully changed.

Frequently Asked Questions

Have these Council recommendations come into force?

Not merely by publication of the press release. The applicable amendments, notifications, rules or circulars and their commencement provisions must be examined.

Can a taxpayer rely on the proposed relief in a current return or proceeding?

Only if the relevant legal instrument is effective and the taxpayer satisfies its conditions. The announcement alone is insufficient.

Will every measure commence on the same date?

The release refers to different proposed implementation arrangements. Each measure must be checked separately against its eventual legal instrument.

Does the release settle all procedural and documentary conditions?

No. Several recommendations expressly contemplate further rule changes, circulars, portal modifications or consultation.

What should advisers do before acting on the announcement?

Maintain the current-law position, identify the specific recommendation, and track the final text, commencement and any transitional provision.

Principal press release: 57th GST Council Meeting – TaxGuru

Provision-by-provision legal verification and qualifications

Classification, not blanket rate changes

The Council identifies sublimation paper under 4809; toys within heading 9503; seaweed-extract biostimulants registered under the Fertiliser Control Order within 3101; Isabgol seeds at nil rate; and retreaded tractor tyres aligned with new tractor tyres. Exact product description matters.

Scrap RCM and TDS classes

The release names plastic scrap, electrical/electronic waste and scrap, tyre scrap and used cooking oil. RCM is proposed on unregistered-to-registered supplies, and 2% TDS on specified registered-to-registered supplies; no general RCM on every kind of scrap is stated.

Used-vehicle ITC

The press release clarifies that the margin-scheme purchase restriction does not extend to otherwise eligible repairs, spares, rent, marketing and technology services. This is separate from rates for second-hand vehicle sales.

Omitted CSD cess proposal

The release also proposes exemption of compensation cess not levied by CSD on two/four wheelers during 1 July 2017–30 September 2022 and by CSD/Unit Run Canteens on aerated drinks during 1 July 2017–31 March 2022. This is confined to the stated historical periods.

Regularisation

“As is where is” is used for specified past classification disputes. It does not by itself establish an automatic refund or nullify a pending demand without implementing legal authority.

Verified TaxGuru internal references

Primary source: 57th GST Council recommendations as published on TaxGuru

Related analysis: Used-car margin scheme AAR ruling

Related analysis: Second-hand car margin-scheme overview

Related analysis: Section 17(5) blocked-credit guide

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Disclaimer: This article is an editorial explanation of the recommendations recorded in the Ministry of Finance press release dated 8 October 2026. It is not a statement that any proposed amendment has commenced. Readers must verify the relevant enacted law, notifications, rules, circulars and judicial developments before acting. TaxGuru accepts no responsibility for decisions taken solely on the basis of this article.