Experts said that the ATF price would come down if it is kept in the 18% GST bracket

At least two out of the five petroleum products, including aviation turbine fuel or ATF and natural gas, are likely to be among the first set of petro products to be included in the Goods and Services Tax (GST) fold ahead of an earlier agreed schedule.

Sources said that the prospect of the two products being included into the GST fold has brightened as the government has started consultations to shift to GST 2.0, which will have fewer rates and limited exemptions.

As part of this, the Finance Ministry has started preparing ground for the next round of discussions at the GST Council with proposal for including gas and ATF into GST fold first before evolving consensus on other petroleum products.

The Ministry of Petroleum and Natural Gas has already put a request for their inclusion in the indirect tax system and the Finance Ministry could consider placing the proposal in the next round of meetings of the GST Council.

As part of its efforts to build concensus with the states on GST launch, the previous Narendra Modi government had decided to exclude five petroleum products -- crude oil, petrol, diesel, ATF and natural gas -- from the list of items placed under GST, but included products such as cooking gas, kerosene and naphtha in the new regime.

This created a messy situation for the companies, as they were required to comply with both the old and new tax regimes. Moreover, tax credits are not transferable between the two systems.

A member of the GST Council had earlier said that though petroleum products were not kept out of GST, its inclusion in the regular tax system may have to wait at least for a year by when the revenue impact of GST would be better known.

The revenue situation of GST this year is not healthy, which could build some resistance against any move to forego further revenues by the states by way of lower taxation in the oil sector.