New Delhi: All petroleum products will be brought under the purview of the goods and services tax in a phased manner, finance secretary Hasmukh Adhia said on Friday, offering a glimmer of hope that petrol and diesel could be brought under the indirect tax regime.

"One of the demands that is there before us (bringing all petroleum products under the GST), we will see... everything will happen in stages," Adhia said at an event here.

At present, diesel, petrol, crude, natural gas and aviation turbine fuel are outside the purview of the GST, and states have the right to impose value added tax on these items.

The GST Council meet slated for July 21 is expected to take up the issue of bringing natural gas within the purview of the indirect tax regime.

Apart from the industry, the petroleum and the civil aviation ministries have pitched for the inclusion of natural gas and aviation turbine fuel in the GST at the earliest.

At present, gas sales, including CNG and piped gas supplies, attract lower VAT, ranging from 5 per cent to 12 per cent, and the inclusion of natural gas in the GST should not result in any large revenue loss.

According to estimates, states earn about Rs 6,000 crore in revenues from natural gas, with most of it concentrated in Gujarat, Maharashtra and Uttar Pradesh.

If natural gas is included, the GST paid on inputs and services used for producing natural gas can be set off against taxes on its sale. This would cut the losses to the industry by a fifth. The move will benefit companies such as Oil and Natural Gas Corporation (ONGC) as well as gas retailers such as IGL.

Airlines pay VAT or state sales tax that ranges from 4-30 per cent and excise duty of 14 per cent.

Airline companies can expect an annual relief of Rs 3,000-5,000 crore under input tax credit if the same is included under the GST. Jet fuel constitutes about 40 per cent of the operating cost of the airlines.

However, bringing petrol and diesel within the ambit of the GST would be a long-drawn process as states would have to be convinced to bring these two fuel under the indirect tax regime.

Even then, the fuels would be subject to the peak rate of 28 per cent and the states will get the leverage to levy additional taxes to prevent revenue losses.