Overview: Chapter 27 of the Harmonised System of Nomenclature (HSN) covers coal, petroleum products, mineral oils, tar, bitumen and mineral waxes. GST rates depend on the product and its tariff classification. Coal attracts 18% GST, while coke and semi-coke and certain coal gases attract 5%. Petrol, diesel, crude petroleum, natural gas and aviation turbine fuel remain outside GST. Businesses must understand the applicable rate notification before issuing tax invoices.
Businesses dealing in coal, petroleum oils, lubricants and industrial fuels need the correct Harmonised System of Nomenclature (HSN) code to calculate GST and prepare tax invoices. An incorrect classification can result in tax short-payment, excess payment or disputes over input tax credit.
Chapter 27 includes products with different tax treatments. This guide explains the main HSN headings, key GST rates and relevant legal provisions. It also clarifies why petrol and diesel are treated differently from other petroleum products.
HSN Codes and GST Rates for Chapter 27
Chapter 27 of the Customs Tariff covers mineral fuels, mineral oils and products of their distillation, bituminous substances and mineral waxes.
The following table is a practical starting point. It is not a substitute for checking the exact product description against the latest GST rate and exemption notifications.
| HSN Code | Product | GST treatment |
|---|---|---|
| 2701 | Coal, briquettes and similar solid fuels manufactured from coal | 18% |
| 2702 | Lignite | Check the exact tariff entry and current rate notification |
| 2703 | Peat, including peat litter | Check the exact tariff entry and current rate notification |
| 2704 | Coke and semi-coke of coal, lignite or peat; retort carbon | 5% |
| 2705 | Coal gas, water gas, producer gas and similar gases, other than petroleum gases | 5% |
| 2706 | Coal tar, lignite tar and other mineral tars | Generally 18% |
| 2707 | Oils and other products from high-temperature coal tar distillation | Generally 18% |
| 2708 | Pitch and pitch coke | Generally 18% |
| 2709 | Crude petroleum oils and oils obtained from bituminous minerals | Outside GST at present |
| 2710 | Petroleum oils other than crude petroleum, certain preparations and waste oils | Generally 18%; specified products have different treatment |
| 2711 | Petroleum gases and other gaseous hydrocarbons, including LPG | Generally 18%; specified LPG supplies attract 5% |
| 2712 | Petroleum jelly, paraffin wax and other mineral waxes | Generally 18% |
| 2713 | Petroleum coke, petroleum bitumen and other petroleum residues | Generally 18% |
| 2714 | Natural bitumen, asphalt and related materials | Generally 18% |
| 2715 | Bituminous mixtures based on asphalt, bitumen or mineral tar | Generally 18% |
| 2716 | Electrical energy | Exempt from GST |
| Note: The exact rate can depend on the product description, its use and any conditions in the relevant notification. Do not apply a general rate where a specific entry or exemption applies. | ||
GST on Coal and Coke
Coal is widely used in power generation, manufacturing and other industrial activities. Its GST treatment changed in September 2025.
From 22nd September, 2025, coal under HSN 2701 attracts 18% GST. The ₹400-per-tonne GST compensation cess on coal was also removed as part of the revised tax structure.
Coke and semi-coke under HSN 2704 and certain coal gases under HSN 2705 have separate 5% rate entries. Businesses should not apply the coal rate to these products without checking their classification.
Since 22nd September 2025, coal attracts 18% GST, while the earlier compensation cess of ₹400 per tonne has been removed. The revised rates were introduced through a government notification issued in September 2025.
The corresponding State GST or Integrated GST treatment depends on whether the supply is intra-State or inter-State.
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Petrol and Diesel Remain Outside GST
Petrol and diesel are not currently subject to GST. Their taxation includes central excise duties and applicable State taxes, including VAT.
Section 9(2) of the Central Goods and Services Tax Act, 2017 deals with the future GST levy on five specified petroleum products:
- Petroleum crude
- High-speed diesel
- Motor spirit, commonly known as petrol
- Natural gas
- Aviation turbine fuel (ATF)
GST will apply to these products from the date notified by the Government on the recommendations of the GST Council. Until the relevant commencement notification takes effect, these products remain outside the GST levy.
This exclusion does not extend to every product made from petroleum. Other petroleum oils, lubricants, bitumen and related products may attract GST according to their classification and the applicable rate entry.
GST on Petroleum Oils, LPG, Bitumen and Tar
Many products under Chapter 27 are taxable under GST. However, their rates depend on the specific goods and any applicable conditions.
Petroleum oils and lubricants
HSN 2710 covers petroleum oils other than crude petroleum, certain preparations containing petroleum oils and waste oils. Lubricating oils and greases generally attract 18% GST.
The heading also includes products with specific tax treatment. Kerosene supplied through the Public Distribution System and certain specified bunker fuels, for example, have separate rate entries. Businesses should check the precise product description and conditions before applying a rate.
LPG and other petroleum gases
Petroleum gases under HSN 2711 generally attract 18% GST. Certain specified supplies of LPG for household domestic consumers and eligible non-domestic exempted category customers attract 5%, subject to the applicable entry and conditions.
The reduced rate should not be applied automatically to every LPG transaction. The supplier, customer category and terms of supply may matter.
Bitumen and asphalt
Bitumen and asphalt are used in road construction, infrastructure projects and industrial applications. These products generally attract 18% GST. The correct classification depends on the material supplied and its composition.
Coal tar and related products
Coal tar and products obtained from its distillation fall under headings such as HSN 2706, 2707 and 2708. These include mineral tar, certain distillation products and pitch.
The applicable rate should be checked against the description in the current notification. A broad commercial name alone may not establish the correct HSN classification.
Legal Provisions Businesses Should Know
The following provisions are useful when determining the GST treatment of coal and petroleum products.
Section 9 of the CGST Act, 2017 — Levy and collection of tax
Section 9 provides the legal basis for levying central GST on taxable intra-State supplies. Section 9(2) specifically addresses the five petroleum products that will become subject to GST from a date notified by the Government on the GST Council’s recommendations.
Notification No. 9/2025 – Central Tax (Rate), dated 17th September 2025
This notification sets out central GST rates for goods through its schedules and replaces the earlier general goods-rate notification. It should be read with subsequent amendments when checking the applicable rate against an HSN heading and product description.
Notification No. 10/2025 – Central Tax (Rate), dated 17th September 2025
This notification sets out goods exempt from central GST. Businesses should consult it alongside the rate notification when checking whether a product is exempt.
Section 31 of the CGST Act, 2017 — Tax invoice
Section 31 deals with the issue of tax invoices. Businesses making taxable supplies must follow the applicable invoice requirements, including the prescribed particulars under the relevant rules.
These provisions should be read with later amendments, notifications and applicable State GST provisions.
Latest GST Council Update
The 57th GST Council meeting on 8th October, 2026, recommendations focused mainly on registration, returns, refunds, adjudication and other compliance reforms. The meeting did not announce a general revision of GST rates.
The Council’s recommendations do not automatically become law. Businesses must check whether a recommendation has been implemented through the relevant notification, circular or legislative amendment.
For coal and petroleum products, the applicable rate notification and any subsequent amendments remain the key references.
How to Confirm the Correct HSN Code and GST Rate
Businesses can follow these steps before issuing an invoice:
- Identify the exact product: Check its composition, use and commercial description.
- Find the appropriate HSN heading: Do not rely only on the product’s trade name.
- Check the current rate notification: Read the full description and any conditions attached to the entry.
- Check exemptions and special rates: Some products under a broad heading may have a different rate or specific exemption.
- Apply the correct tax treatment: Determine whether the supply attracts CGST and SGST or IGST, or falls outside GST.
- Keep supporting records: Retain product specifications, supplier documents and classification notes where relevant.
A consistent classification process can reduce invoicing errors and tax disputes, particularly for businesses dealing in several fuels or petroleum products.
FAQs
Coal under HSN 2701 attracts 18% GST under the rate framework effective from 22nd September, 2025. Businesses should check the current notification for the exact product and any applicable conditions.
No. Petrol and high-speed diesel remain outside GST at present. Their taxation includes central excise and applicable State taxes.
Coke and semi-coke covered by HSN 2704 have a specific 5% GST entry. The product description should be checked before applying this rate.
Bitumen and asphalt generally attract 18% GST. The precise rate should be confirmed against the relevant tariff description and current notification.
No. Many petroleum products attract 18%, but specified products have different rates. Petrol, diesel, crude petroleum, natural gas and aviation turbine fuel remain outside GST at present. Certain LPG supplies and other specified goods also have separate rate treatment.
Businesses should refer to the latest Central Tax (Rate) notifications and exemption notifications published by the Central Board of Indirect Taxes and Customs (CBIC). GST Council announcements are useful for tracking recommendations, but the relevant legal instrument must be checked before applying a change.
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Businesses trading in coal, fuels, lubricants and other petroleum products need reliable product classification, correct invoicing and consistent GST compliance. Errors can affect tax payments, input tax credit and returns.
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