I think the biggest issue is that the income tax base in India is very small. India has 4x the population of US but individual taxpayers are 1/15 of the US. Mos

I think the biggest issue is that the income tax base in India is very small. India has 4x the population of US but individual taxpayers are 1/15 of the US. Most of the people do not pay taxes and the government has to make up the lost revenue somehow - petrol and diesel are the only taxes that can target large swaths of the population. A majority of the Indian population is still in agriculture and agricultural income is not taxed. Also small stores that deal in cash also avoid taxes. Another thing about India is that every election is won by politicians guaranteeing free stuff for the masses - but that money for the free stuff has to come from somewhere - and that is why they need to tax fuel.