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Key Highlights
- Petroleum products, covered under various headings of Chapter 27, play a vital role in industrial applications, including power generation, manufacturing, and construction.
- Crude petroleum (HSN 2709) is currently exempted from GST, but it draws excise duty and other levies.
- Certain petroleum products like petrol and diesel continue to be taxed under excise duty and VAT instead of coming under the purview of GST.
- The GST Council routinely reviews the tax structure of these products to maintain an equilibrium between sustainability and revenue collection for the government.
Mineral fuels, mineral oils, and related products are key commodities for industries such as energy, transportation, and manufacturing. They play a crucial role in powering up economies and bolstering industrial efficiency.Given their significance, it is relevant to know how they fall under the taxation structure within the GST regime. Under the GST framework, these products are classified within Chapter 27 under the harmonised system of nomenclature (HSN). Also Read - Understand the impact of GST on manufacturers, retailers, and distributors
GST Rates for Chapter 27 Products
The GST rates on mineral fuels, oils and related products vary with classifying these products. Below is a brief outline of some of the more important items and the GST rates applicable to them:
| HSN Codes | Export and Import HSN Code | Products Description | Rates (%) |
| 2705 | 27050000 | Other gases, including, but not limited to, petroleum gases and gaseous hydrocarbons, also include coal gas, water gas, producer gas, and associated gases. | 5% |
| 27 | 27090000 | Biogases. | 5% |
| 2701 | 27011100, 27011200, 27011910, 27011920, 27011990, 27012010, 27012090 | Briquettes and ovoids are such coal-based solid fuels. | 5% |
| 2702 | 27021000, 27022000 | Lignite, omitting jet, whether agglomerated or not. | 5% |
| 2703 | 27030010, 27030090 | Peat has sometimes been clumped together, including peat litter. | 5% |
| 2704 | 27040010, 27040020, 27040030, 27040040, 27040090 | Indistinguishably, either coal, lignite, or peat coke and semi-coke, whether agglomerated or not; retort carbon. | 5% |
| 2706 | 27060010, 27060090 | Tars that are distilled from peat, lignite, or coal. | 5% |
| 2706 | 27060010, 27060090 | Mineral tars are only partially distilled or dehydrated into other tars, including reconstituted tars. | 18% |
| 2707 | 27071000, 27072000, 27073000, 27074000, 27075000, 27079100, 27079900 | Oils and other products from the distillation of high-temperature coal tar are similar to benzol (benzene), toluol (toluene), xylose (xylenes), and naphthalene when, by weight, the aromatic constituents exceed the weight of the non-aromatic constituents. | 18% |
| 2708 | 27081010, 27081090, 27082000 | If made from coal tar or other mineral tars, pitch and pitch coke | 18% |
| 2710 | 27101211, 27101212, 27101213, 27101219, 27101220, 27101290, 27101910, 27101920, 27101930, 27101940, 27101950, 27101960, 27101970, 27101980, 27101990, 27102000, 27109100, 27109900 | A) Kerosene oil, and B) IFO 180 CST and IFO 380 CST bunker fuels used in ships or boats. | 5% |
| 2710 | 27101211, 27101212, 27101213, 27101219, 27101220, 27101290, 27101910, 27101920, 27101930, 27101940, 27101950, 27101960, 27101970, 27101980, 27101990, 27102000, 27109100, 27109900 | These include petroleum oils and oils derived from bituminous minerals, except petroleum crude; preparations not otherwise mentioned or included that consist of at least 70% by weight of petroleum oils or bituminous mineral oils, which serve as the preparations' primary constituents; waste oils; Avgas (not included in GST, unless they are kerosene PDS, gasoline, diesel, or ATF). | 18% |
| 2711 | 27111100, 27111400, 27111900, 27112100, 27112900 | The gaseous hydrocarbons included are propane, butanes, ethylene, propylene, butylene, and butadiene, in addition to mixtures of liquefied propane and butane, liquefied propane, liquefied butane, and liquefied petroleum gases. The supplies are provided to domestic household consumers or non-domestic exempted-categories (NDEC) customers by Indian Oil Corporation Ltd, Hindustan Petroleum Corporation Ltd, or Bharat Petroleum Corporation Ltd. | 18% |
| 2712 | 27121010, 27121090, 27122000, 27129010, 27129020, 27129030, 27129040, 27129090 | Petroleum jelly, slack wax, ozokerite, lignite wax, peat wax, paraffin wax, microcrystalline petroleum wax, and others, whether colored or not, are mineral waxes produced by synthesis or other means. | 18% |
| 2713 | 27131100, 27131200, 27132000, 27139000 | Petroleum bitumen, petroleum coke, and other bituminoid products originate from petroleum or oils from bituminous minerals. | 18% |
| 2714 | 27141000, 27149010, 27149020, 27149030, 27149090 | Other natural bituminous or oil shales and tar sands; these asphaltites and asphaltic rocks; bitumen and asphalt. | 18% |
| 2715 | 27150010, 27150090 | Bituminous mixtures are based on mineral tar, mineral tar pitch, petroleum bitumen, natural asphalt, or natural bitumen (such as bituminous mastics and cut-backs). | 18% |
| 27160000 | – | Electrical power | NIL |
| 27111300, 27111200, 27101900 | – | Other than the Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited, or Bharat Petroleum Corporation Limited are the authorities in distributing liquefied propane and butane mixture, liquefied propane, liquefied butane, and liquefied petroleum gases (LPG) to household domestic consumers or non-domestic exempted category (NDEC) customers. | 5% |
Also Read - Here's how households have been impacted by GST
Understanding Chapter 27 of the HSN System
Chapter 27 of the harmonised system of nomenclature (HSN) deals mostly with mineral fuels, mineral oils, and other related products, which are critical for economic growth and industrial production activities. Most petroleum derivatives of the 2710 HSN code GSTrateare subject to 5% or 18% GST, although some are exempt, such as crude petroleum.The use of GST brings an understandable, systematic tax regime and uniformity of tax across the states. A proper understanding of the 2710 HSN code GSTrate is required on the part of the business engaged in trading, refining, and using these products to efficiently discharge tax responsibilities.Companies can thus make informed financial decisions right after the changes in tax policies and avoid the problems of compliance. A GST calculator is also available for easier GST computation and compliance. Use the calculator to find your GST liability and file correct returns for smoother operations.
FAQS - FREQUENTLY ASKED QUESTIONS
What is the GST rate on coal and coal products?
The GST rate on coal, lignite, and peat is 5%. This is a reduced rate aimed at keeping the cost of energy low while still collecting revenue for the government.
Is crude petroleum liable for GST?
No, crude petroleum (HSN 2709) is not liable for GST but attracts excise duty. This has been done to leave some of the petroleum products out of GST to ensure the continuation of revenue arising from the existing import.
What is the GST rate applicable for petrol and diesel?
Petrol and diesel are still out of the GST regime and are still taxed under excise duty and VAT. The government has not yet brought them under GST to shield state revenues from these essential fuels.
Are petroleum gases such as LPG brought under GST?
Yes, petroleum gases such as LPG, propane, and butane come under HSN 2711 and have an 18% GST charge. This charge will be for commercial use, while domestic LPG cylinders might be subsidized or taxed differently.
What is the GST rate on paraffin wax and its HSN code?
Paraffin wax comes under HSN 2712 and is subject to an 18% GST. It encompasses petroleum jelly, microcrystalline wax, and other such goods utilised in different industries, such as cosmetics and pharmaceuticals.
Are bituminous materials exempt from GST?
Yes, bituminous materials come under the purview of HSN 2714 and are subject to an 18% GST. These are utilised primarily in construction works, road surfacing, and waterproofing.
What is the tax framework for coal tar products?
Products of coal tar distillation (HSN 2707) are charged 18% GST. Such products consist of benzene, toluene, xylene, and other chemicals from coal tar distillation.
Is natural gas included under GST?
Yes, natural gas is taxed under GST at 18%. Although some talks have been going on to include it in a lower slab, it is at present under the normal rate.
How are GST rates fixed for these products?
GST rates are determined by the GST Council, taking into account industry impact, revenue, and energy policies. The government reviews them from time to time to maintain a balance between affordability and revenue.
What are the engine oil HSN code and GST rate?
The engine oil HSN code and GST rate is 2710 and will attract an 18% GST. This includes lubricating oils, base oils, and other similar petroleum products for engine lubrication.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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