Naphtha HSN Code

Understanding Naphtha: Navigating its HSN Code and GST

Naphtha is a versatile and crucial petroleum product, widely used as a solvent, a raw material in the petrochemical industry for producing plastics and other chemicals, and even as a fuel. For businesses involved in the production, trade, or consumption of Naphtha in India, understanding its correct Harmonized System of Nomenclature (HSN) code is vital for accurate Goods and Services Tax (GST) compliance. The classification of Naphtha depends on its origin and specific composition.

Naphtha’s Place in the HSN Framework: Chapter 27

The primary classification for most commercial Naphtha falls under HSN Chapter 27: “Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes.” This chapter specifically deals with products derived from petroleum and other mineral sources.

• Full Orange Naphtha: This specific type of Naphtha is directly listed under HSN 27101229. This indicates that various grades and types of Naphtha derived from mineral oils will fall within HSN 2710.
  • This “Full Orange Naphtha” attracts an 18% GST rate, effective from July 1, 2017. This rate is generally consistent for petroleum-derived Naphtha.

The Distinct Category: Wood Naphtha (Chapter 38)

While petroleum Naphtha is the most common, there’s also Naphtha derived from wood, often referred to as “wood naphtha.” This type is classified under a different HSN Chapter, reflecting its origin.

• HSN Chapter 38: “Miscellaneous chemical products.” This chapter includes various chemical products not covered elsewhere.
• Wood Tar; Wood Tar Oils; Wood Creosote; Wood Naphtha; Vegetable Pitch; Brewers Pitch And Similar Preparations Based On Rosin, Resin Acids Or On Vegetable Pitch: This comprehensive description explicitly includes “Wood Naphtha.”
  • Various sub-codes under HSN 3807, such as 38070010, 38070020, 38070030, and the broader 3807, all cover “Wood Naphtha” and similar products.
  • All these “Wood Naphtha” related entries consistently attract an 18% GST rate, effective from July 1, 2017.

Distinguishing Naphtha from Naphthalene Derivatives (Chapter 29)

It is crucial to differentiate Naphtha from Naphthalene or its derivatives. While their names sound similar, they are distinct chemical compounds with different HSN classifications.

• HSN Chapter 29: “Organic chemicals.” This chapter covers specific organic chemical compounds.
  • 1,5- Dihydroxy Naphthalene: HSN 29072910.
  • Naphthalene, Chlorinated: HSN 29039960.
  • These are specific chemical compounds derived from Naphthalene (a solid aromatic hydrocarbon), not the liquid petroleum distillate Naphtha. Both also have an 18% GST rate.

Why Accurate HSN Codes for Naphtha Matter

• Ensuring GST Compliance: Using the correct HSN code is fundamental for businesses to accurately calculate, collect, and remit GST, thereby avoiding potential penalties and legal complications.
• Facilitating Trade: The globally standardized nature of HSN codes simplifies both domestic and international trade, making it straightforward to classify and transport Naphtha.
• Streamlining Business Operations: Precise HSN classification significantly aids in efficient inventory management, accurate invoicing, and simpler tax filing procedures for businesses dealing with Naphtha.