Looking for expert help with Income tax and GST for toy shop owners India? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant. End-to-end filings, notices, and deadline tracking, all in one place.
Key Takeaways
- From 22 September 2025, toys like tricycles, scooters and pedal cars, other than electronic toys, are 5% GST, down from 12% (Notification 9/2025-Central Tax (Rate), Schedule I, S. No. 497).
- Playing cards, chess, carom and board games like ludo are also 5%. Bicycles and toy balloons of natural rubber latex are 5%.
- Electronic toys, video game consoles, festive and party articles, and modelling clay are 18% (Schedule II).
- A single-price combo pack with one 18% item is taxed at 18% on the whole pack.
- Under Section 44AD, deemed profit is 6% of digital receipts and 8% of cash. Moving cash sales to UPI lowers the figure.
What is the GST rate on toys in India? From 22 September 2025, "toys like tricycles, scooters, pedal cars etc." of heading 9503, other than electronic toys, attract 5% GST under Schedule I of Notification 9/2025-Central Tax (Rate). Electronic toys are 18% under Schedule II. Board games and playing cards are 5%, while video game consoles and festive or party articles are 18%.
Walk down the aisle of a toy shop and the rate changes every few feet. The wooden puzzle is 5%. The remote-control car beside it is 18%. The ludo board is 5%, the gaming console is 18%, and the birthday banner at the counter is 18% too. The Goods and Services Tax (GST) rate cut on toys in September 2025 widened this gap, because non-electronic toys dropped from 12% to 5% while electronic toys stayed at 18%. This guide covers which rate applies to what you sell for AY 2026-27, how to price combo packs, and how your income tax is worked out.
What GST rate applies to what you sell?
Comparison
GST Rates for Toy Shop Items (from 22 September 2025)
| Item | HSN | GST rate |
|---|---|---|
| Toys like tricycles, scooters, pedal cars etc., including parts and accessories [other than electronic toys] | 9503 | 5% |
| Toy balloons made of natural rubber latex | 9503 | 5% |
| Playing cards, chess, carom, ludo and other board games | 9504 | 5% |
| Bicycles and cycles, not motorised | 8712 | 5% |
| Parts and accessories of bicycles | 8714 | 5% |
| Sports goods (cricket bats, balls, badminton racquets) | 9506 | 5% |
| Electronic toys, including electronic tricycles, scooters and pedal cars | 9503 | 18% |
| Video game consoles and machines, table and parlour games | 9504 | 18% |
| Festive, carnival and party articles, conjuring tricks, novelty jokes | 9505 | 18% |
| Modelling pastes and clay, including those for children's amusement | 3407 | 18% |
| Articles and equipment for general physical exercise | 9506 | 18% |
Source: Notification 9/2025-Central Tax (Rate), Schedule I S. No. 456, 458, 496 to 499; Schedule II S. No. 71, 616 to 619
The 5% toy entry names only tricycles, scooters and pedal cars as examples, and "etc." with one exclusion: electronic toys. It doesn't list dolls, soft toys, puzzles or blocks by name. Shops commonly bill non-electronic toys under it, but for any product you're unsure of, match the HSN and rate on your supplier's invoice.
Within your state you charge half as CGST and half as SGST, so 2.5% + 2.5% or 9% + 9%. To another state it's the full rate as IGST. Stock a supplier invoiced before 22 September 2025 keeps the input tax credit (ITC) at whatever rate the supplier charged. Your sale today goes out at the current rate.
For cricket kits, gym gear and other sports items, see our GST guide for sports goods and fitness equipment.
Where do toy shops get the rate wrong?
The 5% toy entry has one exclusion that matters: "other than electronic toys". The 18% entry names electronic toys "like tricycles, scooters, pedal cars etc." So the same ride-on car is 5% as a pedal car and 18% as a battery-run electric car.
Three pairs cause most errors:
- Pedal car vs electric ride-on. Pedal and push toys are 5%. Battery-run ride-ons are 18%.
- Board game vs gaming console. Ludo, chess, carom and card games are 5%. Consoles and video game machines are 18%.
- Toy vs party supplies. A latex balloon is 5%. Birthday banners, masks, party props and magic kits are festive or entertainment articles at 18%.
Say a customer buys a remote-control car for Rs 1,180 including GST. At 18%, the tax in it is Rs 180 (1,180 x 18/118). If your software bills it at 5%, it shows Rs 56 (1,180 x 5/105), and you've under-reported Rs 124 on one sale. The mistake runs the other way on a Rs 525 doll: at 5% the GST is Rs 25, but billed at 18% it shows Rs 80, overstating your tax by Rs 55. Set up each product with its own HSN and rate in your billing software, so counter staff never choose a rate.
If a product sits on the line, such as a plush toy with a small sound chip, check the HSN and rate on your supplier's invoice first. If it's still unclear, confirm the classification before you set the rate.
What about combo packs and gift hampers?
Birthday hampers often mix 5% and 18% items. If they're packed together and sold at one price, and the items aren't naturally sold together in the ordinary course of business, it's a mixed supply. Section 8(b) of the Central Goods and Services Tax (CGST) Act taxes the whole supply at the highest rate in it.
Step-by-Step Guide
Pricing a Mixed Toy Hamper
List what goes in the pack
Example: a board game (5%), a doll (5%) and a small electronic toy (18%), sold as one hamper for Rs 2,360 including GST.
Find the highest rate
The electronic toy is 18%, so the whole hamper is 18% under Section 8(b), CGST Act.
Work out the tax
Rs 2,360 x 18/118 = Rs 360 GST. Taxable value Rs 2,000.
Or sell the items separately
If each item has its own price on the invoice and the customer can buy them on their own, each line carries its own rate.
Source: Section 8(b), CGST Act 2017
When do you need GST registration?
If you only sell goods, registration is required once aggregate turnover crosses Rs 40 lakh in most states. Telangana and several other states kept the Rs 20 lakh limit (Notification 10/2019-Central Tax). A Hyderabad toy shop selling Rs 25 lakh a year must register. Selling to a buyer in another state needs registration from the first rupee (Section 24(i), CGST Act). Our GST registration service can set this up for you.
Regular scheme or composition?
Under the composition scheme, a trader pays 1% of turnover (Rule 7, CGST Rules), up to Rs 1.5 crore a year. You can't charge GST on your bill, can't claim ITC and can't sell to other states (Section 10(2)(c), CGST Act). You issue a bill of supply, not a tax invoice.
Most toy shops sell to parents who don't claim ITC, often at the printed price. The answer changes with your mix of 5% and 18% items:
- A 5% toy bought for Rs 400 plus Rs 20 GST and sold at Rs 630. Regular scheme: GST in the price is Rs 30, you pay Rs 10 after ITC and keep Rs 200. Composition: you pay Rs 6.30 and keep Rs 203.70. Composition leaves Rs 3.70 more.
- An 18% electronic toy bought for Rs 1,000 plus Rs 180 GST and sold at Rs 1,475. Regular scheme: GST in the price is Rs 225, you pay Rs 45 after ITC and keep Rs 250. Composition: you pay Rs 14.75 and keep Rs 280.25. Composition leaves Rs 30.25 more.
On these numbers composition wins, and by more on electronic toys. It stops making sense if you supply schools, play schools or other shops that want a tax invoice to claim ITC, or if you plan to sell to customers in other states. See our composition scheme guide for the full conditions.
How is your income taxed for AY 2026-27?
Section 44AD lets a resident individual, HUF or partnership firm (not an LLP) declare a deemed profit instead of keeping full books. The limit is Rs 2 crore of turnover, or Rs 3 crore where cash receipts are within 5% of total receipts. The deemed profit is 6% of receipts by UPI, card or bank and 8% of cash receipts. You can declare more than this.
Example 1 (Rs 1.5 crore turnover, new regime): Rs 1.2 crore comes by UPI and card, Rs 30 lakh in cash.
- Deemed profit: 6% of Rs 1.2 crore (Rs 7,20,000) plus 8% of Rs 30 lakh (Rs 2,40,000), so Rs 9,60,000.
- Tax: 5% of Rs 4,00,000 (Rs 20,000) plus 10% of Rs 1,60,000 (Rs 16,000), so Rs 36,000.
- The Section 87A rebate covers income up to Rs 12 lakh. Tax payable: nil, assuming no other income.
Example 2 (Rs 2.5 crore turnover, new regime): A large shop with a busy Diwali and Christmas season takes Rs 12 lakh in cash (4.8% of receipts), so the Rs 3 crore limit applies. The other Rs 2.38 crore is digital.
- Deemed profit: 6% of Rs 2.38 crore (Rs 14,28,000) plus 8% of Rs 12 lakh (Rs 96,000), so Rs 15,24,000.
- Tax: Rs 20,000 + Rs 40,000 on the slabs up to Rs 12 lakh, plus 15% of Rs 3,24,000 (Rs 48,600). Total Rs 1,08,600. No 87A rebate above Rs 12 lakh. Add 4% cess of Rs 4,344. Tax payable: Rs 1,12,944.
If that shop's cash had been Rs 15 lakh (6%), the Rs 3 crore limit wouldn't apply, and at Rs 2.5 crore it would need books and a tax audit.
Step-by-Step Guide
Before You Declare Less Than the Section 44AD Figure
Check the last five years
If you declared under Section 44AD in any of them, going below it now bars you from Section 44AD for the next five assessment years (Section 44AD(4)).
Check the audit trigger
Under that bar, if your income is above the basic exemption limit you must keep books and get a tax audit (Sections 44AD(5) and 44AB(e)).
Check the turnover audit limit
Filing on books above Rs 1 crore turnover needs an audit under Section 44AB, unless cash receipts and cash payments are each within 5%, which raises the limit to Rs 10 crore.
Make sure the books support the figure
Your GST returns and bank statements show your sales. A declared profit well below what they imply has to be backed by proper accounts.
File the right form
ITR-4 for Section 44AD if total income is within Rs 50 lakh and other conditions are met; ITR-3 if you file on books.
Source: Sections 44AA, 44AB, 44AD and 87A, Income-tax Act 1961; Finance Act 2025
See our Section 44AD guide and old vs new regime guide.
Common mistakes toy shops make
- One default rate for the whole shop. A typical toy range mixes 5% and 18% items. Set the rate per product.
- Billing electric ride-ons and remote-control toys at 5%. Electronic toys are 18%, even when the same design comes in a 5% pedal version.
- Putting party supplies in the toy rate. Banners, masks, props and magic kits are festive or entertainment articles at 18%. Only natural rubber latex balloons are 5%.
- Treating modelling clay as a toy. Modelling pastes, including those for children, are 18% under heading 3407.
- Charging 5% on a mixed hamper. One 18% item makes the whole single-price pack 18%.
How Tax Garden helps toy retailers
We set up your item master with the right HSN and rate for every product, then file GSTR-1 and GSTR-3B with mixed hampers reported correctly. See our GST return filing service. We also compare composition against the regular scheme on your real margins, and prepare your ITR on Section 44AD or books; see our ITR filing service and pricing. For a general store that also stocks toys, see our income tax guide for kirana store owners.
