Background:
Notification No. 9/2025-Central Tax (Rate) dated 17.09.2025 is the principal rate notification for goods, which replaced Notification No. 1/2017-Central Tax (Rate) with effect from 22.09.2025 when the 56th GST Council’s rate rationalisation (two-slab structure of 5% and 18%, with a 40% rate for specified goods) was implemented. Schedule I of the said notification prescribes central tax at 2.5% (i.e., 5% GST) and Schedule II prescribes 9% (i.e., 18% GST).
Bio-stimulants: S. No. 237 of Schedule I covers heading 3101, i.e., “All goods i.e. animal or vegetable fertilisers or organic fertilisers pre-packaged and labelled”, taxable at 5%. Sea-weed extract based bio-stimulants are regulated as fertilisers under Schedule VI to the Fertiliser (Inorganic, Organic or Mixed) (Control) Order, 1985 (“FCO”), which was inserted in 2021 specifically to regulate bio-stimulants. However, the trade faced classification disputes, with the Department seeking to classify such products under heading 3808 (plant growth regulators, taxable at 18%) or under other residual headings, resulting in demands and litigation. The 57th GST Council recommended (para C1(3) of the Press Release) that sea-weed extract based bio-stimulants registered under Schedule VI to the FCO be clarified as classifiable under heading 3101 as fertilisers, by inserting an Explanation in S. No. 237 of Schedule I, and that past cases be regularised on an “as is where is” basis. The FAQs issued by the CBIC further clarify that (i) only those sea-weed extract based bio-stimulants that are registered under the FCO are covered, (ii) all sea-weed extract based products are not covered, and (iii) sea-weed extract based products containing Plant Growth Regulators (PGRs) do not qualify as bio-stimulants under the FCO and would not be covered by S. No. 237.
Retreaded tractor tyres: Under the rationalised rate structure effective 22.09.2025, new tractor tyres and tubes (tariff items 4011 70 00 and 4013 90 49, and rear tractor tyres and tubes) are taxable at 5% under Schedule I of Notification No. 9/2025-Central Tax (Rate). However, retreaded tyres of all kinds continued under S. No. 138 of Schedule II (heading 4012: “Retreaded or used pneumatic tyres of rubber; solid or cushion tyres, tyre treads and tyre flaps, of rubber”) at 18%. This created an anomaly whereby a retreaded tractor tyre attracted a higher rate than a new tractor tyre, discouraging the economical practice of retreading in the farm sector. The 57th GST Council recommended (para C1(7) of the Press Release) correcting this anomaly by aligning the GST rate on retreaded tractor tyres with that applicable to new tractor tyres.
What the Notification provides:
Now, the CBIC vide Notification No. 02/2026-Central Tax (Rate) dated 27.10.2026 (G.S.R. 921(E)), issued under Section 9(1) read with Section 15(5) of the CGST Act, 2017 on the recommendations of the GST Council, has made the following amendments in Notification No. 9/2025-Central Tax (Rate) dated 17.09.2025 (last amended vide Notification No. 01/2026-Central Tax (Rate) dated 30.04.2026):
- Schedule I (2.5%), S. No. 237 substituted: Against S. No. 237 (heading 3101), the entry in column (3) has been substituted to read: “All goods i.e. animal or vegetable fertilisers or organic fertilisers pre-packaged and labelled. Explanation. – This entry includes, sea-weed extract based bio-stimulants, as registered under Schedule VI to the Fertiliser (Inorganic, Organic or Mixed) (Control) Order, 1985.” The description of the entry itself is unchanged; the Explanation has been added to put the classification of FCO-registered sea-weed extract based bio-stimulants beyond doubt.
- Schedule I (2.5%), new S. No. 272A inserted: After S. No. 272, a new entry “272A. – 4012 – Retreaded tractor tyres” has been inserted, so that retreaded tractor tyres now attract central tax at 2.5% (5% GST).
- Schedule II (9%), S. No. 138 substituted: Against S. No. 138 (heading 4012), the entry in column (3) has been substituted to read: “Retreaded or used pneumatic tyres of rubber (other than retreaded tractor tyres); solid or cushion tyres, tyre treads and tyre flaps, of rubber”. Retreaded tractor tyres are thus carved out of the 18% entry, while all other retreaded or used pneumatic tyres, solid or cushion tyres, treads and flaps continue at 18%.
| Entry | Position up to 31.10.2026 | Position w.e.f. 01.11.2026 |
| S. No. 237, Schedule I (heading 3101) | All goods i.e. animal or vegetable fertilisers or organic fertilisers pre-packaged and labelled – 5%. Coverage of sea-weed extract based bio-stimulants disputed. | Same entry at 5%, with an Explanation that the entry includes sea-weed extract based bio-stimulants registered under Schedule VI to the FCO, 1985. |
| Retreaded tractor tyres (heading 4012) | Covered by S. No. 138 of Schedule II – 18% | New S. No. 272A of Schedule I – 5% |
| Other retreaded or used pneumatic tyres; solid or cushion tyres, tyre treads and flaps (heading 4012) | S. No. 138 of Schedule II – 18% | S. No. 138 of Schedule II (as substituted) – 18% |
Identical amendments have been made for inter-State supplies and supplies in Union Territories vide Notification No. 02/2026-Integrated Tax (Rate) dated 27.10.2026 (G.S.R. 922(E)) amending Notification No. 9/2025-Integrated Tax (Rate) (Schedule I at 5% and Schedule II at 18%), and Notification No. 02/2026-Union Territory Tax (Rate) dated 27.10.2026 (G.S.R. 923(E)) amending Notification No. 9/2025-Union Territory Tax (Rate).
Effective date:
The Notification comes into force on 1st November, 2026. Supplies of retreaded tractor tyres for which the time of supply under Section 12 of the CGST Act falls on or after 01.11.2026 will attract 5%. The Council’s recommendation to regularise the past period for sea-weed extract based bio-stimulants on an “as is where is” basis is not part of this Notification and is expected to be given effect through a separate circular, in the manner followed for earlier regularisations.
Key takeaways for taxpayers and the industry:
- Bio-stimulant manufacturers and importers: FCO registration under Schedule VI is the touchstone. Products which are sea-weed extract based and registered under Schedule VI to the FCO can be supplied at 5% under S. No. 237, provided they are pre-packaged and labelled. Registration certificates and labels should be maintained as evidence of classification. Sea-weed based products which are not FCO-registered, or which contain PGRs, remain outside the entry and continue to be classified on merits (typically under heading 3808 at 18%).
- Pending disputes: Taxpayers facing show cause notices or demands on classification of sea-weed extract based bio-stimulants for the period prior to 01.11.2026 should track the regularisation circular; where tax has been paid at a higher rate, no refund is expected under the “as is where is” approach, while where 5% has been paid, the position is expected to be accepted.
- Tyre retreaders and dealers: Retreading of tractor tyres becomes materially cheaper for farmers (18% to 5%). Invoices and HSN/rate masters must distinguish retreaded tractor tyres (S. No. 272A, 5%) from other retreaded tyres (S. No. 138, 18%). Since the inputs for retreading (tread rubber, bonding gum, etc.) are generally taxed at 18%, retreaders may face an inverted duty structure on this product and may examine refund of accumulated ITC under Section 54(3) of the CGST Act (tyres are not among the goods excluded from inverted duty refund under Notification No. 5/2017-Central Tax (Rate)).
- Price revisions and anti-profiteering: Although the anti-profiteering provisions under Section 171 have been sunset for new applications, the industry should pass on the benefit of the rate reduction on retreaded tractor tyres to farmers, consistent with the objective stated by the Council.
- Transitional supplies: Where advances were received or invoices issued before 01.11.2026 for retreaded tractor tyres supplied on or after that date, the rate will be determined under Section 14 of the CGST Act (change in rate of tax).
Similar notifications have been passed under the Integrated Goods and Services Tax Act, 2017 (“the IGST Act”) and the Union Territory Goods and Services Tax Act, 2017 (“the UTGST Act”).
The Notification can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2026/10/N.-No.-02-2026-CT-UT-IG-Rate.pdf
