From LPG Prices to Additional Tax on Tobacco: How Budget Changes Will Impact the Life and Expenses of Citizens

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The government announced a new excise duty on cigarettes, effective February 1. The policy move triggered concerns over pricing, demand, and margin pressures in the tobacco sector. 

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.

Cigarette Excise Duty

The Finance Ministry ordered that “excise duty will be imposed in the range of Rs. 2,050-8,500 per thousand sticks based on the length of the products from February 1.”

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The new levies on tobacco will be in addition to the GST rate. It will replace the compensation cess currently levied on such sin goods, according to the PTI report. Parliament approved the Central Excise (Amendment) Bill 2025 in December. It replaces a temporary levy on cigarettes and tobacco products.

A Reuters report stated, “The total taxes on cigarettes in India currently make up about 53% of retail prices, well below the World Health Organisation benchmark of 75% aimed at discouraging consumption.”

LPG Cylinder Prices

Oil marketing companies revise LPG cylinder prices on the first day of every month. This implies that updated LPG prices will be released on February 1, 2026. Citizens will be closely monitoring these prices, as it will coincide with Budget Day. On January 1, the price of a commercial LPG cylinder in the national capital was reduced by Rs. 14.50, becoming Rs. 1804.

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Changes for FASTag Users

From February 1, the National Highways Authority of India (NHAI) will discontinue the mandatory Know Your Vehicle (KYV) process for new FASTags issued for cars, jeeps, and vans. This shift is expected to bring huge relief for commuters.

Final Thoughts

January is coming to an end, and February will begin with the presentation of the Union Budget. Several changes are expected, which might affect every household. The government is making a strong statement to both smokers and investors. The judicial use of taxes and promotion of larger health warnings are the main means for this government movement.