Union Budget 2026: Tobacco taxes, FASTag rules and LPG prices change Feb 1

India is heading into February 1 with multiple consumer-facing changes landing on the same day Finance Minister Nirmala Sitharaman is scheduled to present the Union Budget 2026-27 in Parliament. The shifts span tobacco taxation, highway toll compliance and routine monthly fuel-price resets, with banks also entering a holiday-heavy month that could affect branch access in some states.

Tobacco taxes reset as new excise duties take effect

From February 1, newly notified duties will add to the tax burden on cigarettes and other tobacco products, as the Centre moves to levy central excise on a range of items, including cigarettes, chewing tobacco, gutkha and related preparations. The changes are part of a broader restructuring in which the government has also designated February 1 as the start date for provisions under the Health and National Security Cess framework for pan masala, alongside amendments enabling new excise levies.

The Finance Ministry notification lays out duty slabs by product type and cigarette length, for example, non-filter cigarettes up to 65 mm at Rs 2,050 per thousand, and some categories reaching Rs 8,500 per thousand. According to reports, retail cigarette prices could rise 15% to 40% from February 1, citing the government’s notified duty structure and market expectations.

FASTag KYV verification to be dropped for most new private-vehicle tags

Highway users with cars, jeeps and vans are set to see an easier onboarding process for new FASTags from February 1, after the National Highways Authority of India decided to discontinue the “Know Your Vehicle” (KYV) verification step that previously followed tag activation.

Reports said the revised approach shifts more verification responsibility to issuing banks before the tag is issued, often using the VAHAN database, and reserves further checks for complaint-based cases such as suspected misuse or wrong vehicle-tag linking.

LPG price reset, and bank closures to watch in February

Oil marketing companies typically revise LPG cylinder prices on the first day of each month, and updated rates are due on February 1, coinciding with Budget Day, when households and small businesses will be watching closely for any relief or further increases.

Bank customers should plan their branch visits considering a combination of weekly closures and state-specific holidays. According to the Reserve Bank of India’s calendar, banks are closed nationwide on Sundays and on the second and fourth Saturdays of each month. Additionally, there may be extra closures for local observances, such as Losar and Chhatrapati Shivaji Maharaj Jayanti, in certain states.