If you sell toys, you may have seen dolls, puzzles and scale models billed at different GST rates by different shops. This happened because some tax officers read the toy entries in the GST rate list narrowly. They left out toys that were not named in those entries, and that led to confusion and uneven tax treatment.
CBIC Circular No. 265/11/2026-GST, dated 28 October 2026, settles how these existing entries should be read. In short, non-electronic toys under heading 9503 (the 4-digit HSN code group that covers toys), such as dolls, puzzles and scale models, are taxed at 5%. Electronic toys are taxed at 18%. Parts and accessories follow the same split.
Below, we explain what the circular says and how to apply the 5% or 18% rate at the counter. We also cover what to check in your HSN codes and item master, and what the circular does and does not say about past bills.
What CBIC Circular 265/11/2026 says about GST on toys
On 28 October 2026, the Tax Research Unit of CBIC issued Circular No. 265/11/2026-GST. A circular is an instruction from CBIC to its own tax officers. CBIC used its power under section 168(1) of the CGST Act, 2017. This section lets CBIC give such instructions so that every tax office applies the law in the same way.
The circular follows recommendations made by the GST Council at its 57th meeting, held in New Delhi on 8 October 2026. For a wider look at that meeting, read our article on 57th GST Council meeting decisions for small businesses.
Toys are one of four topics
The circular deals with four issues. These are sublimation paper, toys, input tax credit for used-vehicle dealers under the margin scheme, and sea-weed based bio-stimulants. This article covers only the toys part.
The question traders asked
Heading 9503 of the Customs Tariff Act, 1975 is the group where toys are classified. Traders asked about S. No. 497 of Schedule I and S. No. 616 of Schedule II of Notification No. 09/2025-C.T.R. dated 17.09.2025. Do these entries cover all toys under heading 9503? Or do they cover only toys like the named examples, which are tricycles, scooters and pedal cars?
Some field formations (local GST offices and officers) had read these entries narrowly. They left out toys that were not named. This caused confusion, and the same kind of toy was taxed differently in different places. The circular clarifies how the existing entries should be read. It does not bring in a new rate.
CBIC has told its field formations to follow the circular. They must report any difficulty in applying it to the Board. A separate circular issued the same day, No. 266/12/2026-GST, deals with certain services and does not affect toy rates.
GST rate on dolls, puzzles and scale models: 5% or 18%?
The main point of the clarification is simple. In the toy rate entries, the word 'etc.' is not limited to tricycles, scooters, pedal cars and other wheeled toys. It covers all kinds of toys in heading 9503, which is the HSN group for toys.
So the entries also cover dolls' carriages, dolls, other toys, reduced-size ('scale') models and similar recreational models (working or not), and puzzles of all kinds.
Which rate applies to which toy
| Toy type | Rate entry | GST rate |
|---|---|---|
| Non-electronic toys (dolls, puzzles, scale models, tricycles, etc.) | S. No. 497, Schedule I | 5% |
| Electronic toys | S. No. 616, Schedule II | 18% |
| Parts and accessories of non-electronic toys | S. No. 497 | 5% |
| Parts and accessories of electronic toys | S. No. 616 | 18% |
Worked example: intra-state sale
An intra-state sale means the seller and the buyer are in the same state. The GST is split equally into CGST (central tax) and SGST (state tax).
- Doll, taxable value ₹1,000: GST at 5% is ₹50 (CGST ₹25 + SGST ₹25). The bill total is ₹1,050.
- Electronic toy, taxable value ₹1,000: GST at 18% is ₹180 (CGST ₹90 + SGST ₹90). The bill total is ₹1,180.
No new rate
The circular does not create a new rate. It explains how the existing entries in Notification 09/2025-C.T.R. dated 17 September 2025 should be read. Notification 09/2025-C.T.R. has applied since 22 September 2025. Check the CBIC website for any later amendments to the toy entries.
Electronic or non-electronic toy: how to decide the GST rate
For toys under heading 9503, the GST rate comes down to one question. Use this checklist when you set the rate for each toy.
- Ask one question: is the toy electronic? A non-electronic toy, such as a doll, puzzle or scale model, is taxed at 5%. An electronic toy is taxed at 18%. The 18% entry is S. No. 616 of Schedule II of notification No. 09/2025-C.T.R. It covers electronic toys like tricycles, scooters, pedal cars etc. The 5% and 18% entries use the same kind of examples, so the name of the toy does not decide the rate. Whether the toy is electronic or not decides it.
- Do not guess on borderline items. This guide does not give a definition of 'electronic toy' from the circular, so do not use your own test. If you are unsure about a toy, first check how your supplier billed it on the purchase invoice. Then confirm with your CA before you sell it.
- Parts and accessories follow the toy. Parts are spare pieces of a toy. Accessories are add-ons used with it. Both are included in the same entries. A spare part for a non-electronic toy goes at 5%. A spare part for an electronic toy goes at 18%.
- Keep a separate list of doubtful SKUs. An SKU is each separate item code in your stock. List the items that come in two versions, for example the same toy sold with or without electronic parts. Get a written view from your CA on these items. Set their rates only after you have it.
A written note from your CA also gives you a clear record of why you chose 5% or 18% for each borderline item.
HSN code for toys on the bill and updating your item master
The HSN code is the product code printed against each item on a GST bill. All the toys covered by this clarification fall under heading 9503 of the Customs Tariff Act, 1975. Start from the HSN code on your supplier's purchase invoice, check that it fits the product, and confirm the exact digits with your CA.
Your item master is the list of products saved in your billing software, with each item's name, HSN code and GST rate. You can check it in four steps.
- Filter all toy items. Pull out every toy you sell: dolls, puzzles, jigsaws, model kits, ride-ons, and their parts and accessories.
- Check the HSN code. Each of these items should carry an HSN code under heading 9503. Note any item saved under a different heading, and check it with your CA.
- Mark electronic or non-electronic. Set the GST rate to 18% for electronic toys and 5% for non-electronic toys. Parts and accessories follow the same split.
- Match purchase and sale rates, then test. Compare the rate on your purchase bills with the rate you charge on sales. If they do not match, raise it with the supplier. Then print one test bill for each toy category. For example, a non-electronic doll sold for ₹1,000 within your state should show CGST ₹25 and SGST ₹25.
In ValueSoft, the item-wise HSN code and GST rate you set during product creation flow into each GST invoice. CGST/SGST (central and state tax for sales within your state) or IGST (tax for sales to another state) is worked out automatically. If you run a toy counter, our POS billing software for retail shops adds barcode billing, so the right item is picked when you bill.
Past toy bills at 5% or 18%: what the circular does and does not say
The circular does deal with past periods for some items, but not for toys. For sublimation paper and sea-weed bio-stimulants, it records the GST Council's recommendation to settle past periods on an 'as is where is' basis. In simple words, old transactions are left as they were. The toys section has no such wording.
So the circular is silent on three questions. It does not say whether earlier invoices should be revised. It does not say whether refunds of extra tax are available. It does not say whether tax demands (notices asking for unpaid tax) for past months will or will not be raised. Do not assume any of these.
If your past toy bills used a different rate
Maybe you charged 18% on non-electronic toys. Or a tax office told you that 5% was wrong because your toy was not named in the entry. In either case, first collect your past toy sales data. Then get your CA's advice before you change any old invoice or filing.
CBIC has told its field formations to act in line with the circular and asked that any difficulty in applying it be reported to the Board. This means more guidance may come. Keep an eye on CBIC updates.
Practical tip: get your data ready
From your GST report, pull item-wise and rate-wise toy sales for the months in question. Your CA will need this to see what was billed at 5% and what was billed at 18%. If you use ValueSoft GST billing and return filing software, you can share its GST reports with your CA every month. These reports include credit and debit notes.
Your Next Steps on Toy GST
Circular 265/11/2026 confirms that all toys under heading 9503, including dolls, puzzles and scale models, fall in the toy entries. Non-electronic toys attract 5% GST and electronic toys attract 18%. Parts and accessories follow the same split. The circular does not bring a new rate. It only clarifies how the existing entries should be read.
This week, take three steps:
- Update your item master: Check that each toy has heading 9503 and the correct 5% or 18% rate.
- Confirm borderline items with your CA: Do this for any toy you are not sure is electronic or non-electronic.
- Match your sales rates with your purchase bills: Any gap should have a clear reason.
For past bills, the circular gives no specific direction on toys. Take your CA's advice before you change any old invoice.
Frequently asked questions
Does the word 'etc.' in the toy rate entry cover only wheeled toys like tricycles, or all toys under HSN 9503?
It covers all toys under heading 9503. CBIC clarified that S. No. 497 of Schedule I and S. No. 616 of Schedule II of notification No. 09/2025-C.T.R. are not limited to tricycles, scooters, pedal cars and similar wheeled toys. The word 'etc.' includes dolls, dolls' carriages, other toys, reduced-size ('scale') models and similar recreational models (working or not), and puzzles of all kinds.
Can GST officers ask me for extra tax on toys I sold at 5% before this circular?
The toys section of Circular 265/11/2026 has no wording about past periods. For sublimation paper and sea-weed bio-stimulants, the same circular records a recommendation to settle past periods on an 'as is where is' basis, but it says nothing similar for toys. CBIC has told its field formations to act in line with the circular, which confirms that non-electronic toys such as dolls, puzzles and scale models are taxed at 5%.
I charged 18% on dolls and puzzles in earlier months. Do I need to change old invoices, or can I get a refund?
The circular does not address correcting past toy invoices or claiming refunds. Unlike the sections on sublimation paper and bio-stimulants, the toys section has no past-period wording. It only clarifies that non-electronic toys under heading 9503, such as dolls and puzzles, are taxed at 5%. Speak to your tax adviser before changing old invoices or filing any claim.
Sources
This article is for general information. GST rules change from time to time: check the GST portal or ask your CA before acting on it.
