Indians are taxed 260 percent for fuel, four times more than the UK, Japan, and the US.

India charges the highest fuel tax at around 260 percent of the base Petrol price and 256 percent for diesel.

Taxes for fuel are considerably higher in India than in other countries. According to CARE Ratings, after an initial review, the Indian government collected about 134 percent of taxes (duties and VAT) from petrol's base price and 88 percent from diesel (as of March 16, 2020). The second tariff review allowed the government to increase its tax (excise and VAT) by about 260 percent on petrol and 256 percent on diesel fuel (May 6, 2020). The fuel tax against pump price was about 65 percent of retail prices in Germany and Italy, 62 percent in the U.K., 45 percent in Japan, and less than 20 percent in the U.S.

The retail prices of petrol and diesel in India are linked to global market prices. In India, petrol and diesel prices are calculated based on the average of the last 15 days of benchmarked Arab-Gulf fuel prices. The pricing method involves 80 percent of the import price and 20 percent of the export price of the fuel. This means that diesel and petrol prices are indirectly connected to crude oil, and the increase in crude oil prices leads to a rise in petrol and diesel price.

The current high price of petrol and diesel can be attributed to high taxes and an increase in the price of crude oil.

Reference links

Financial Express

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Care Ratings

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Care Ratings

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The Indian Express

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