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% of taxes (duties and VAT) from petrol's base price and 88% from diesel (as of March 16, 2020). The second tariff review allowed the government to increase its tax (excise and VAT) by about 260% on petrol and 256% on diesel fuel (May 6, 2020). In comparison, the fuel tax against pump price was about 65% of retail prices in Germany and Italy, 62% in the UK, 45% in Japan, and less than 20% in the US.
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% of the import price and 20% 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 price leads to a rise in petrol and diesel price.
The current high price of petrol and diesel can be attributed to high taxes and and an increase in the price of crude oil.