Budget 2026: Tax Shifts That Impact Your Vehicle & Fuel Costs | Check CNG, Petrol, Diesel, LPG Rate Changes

The Union Budget for 2026-27, presented on February 1, did not announce any direct changes to central excise duties on petrol, diesel, or domestic cooking gas. However, fuel-related expenses saw mixed effects due to frequent monthly price revisions by oil firms and significant indirect tax changes linked to automobiles.

What Are the Current Retail Fuel Prices After the Budget?

As of February 1, 2026, retail prices in Delhi for key fuels are:

Petrol: Approximately ₹94.72 per litre (unchanged).

Diesel: Approximately ₹87.62 per litre (unchanged).

CNG: Approximately ₹76 per kg (stable, following a January reduction).

Domestic LPG (14.2 kg): ₹853 for general users / ₹553 for Ujjwala beneficiaries (unchanged).

Commercial LPG (19 kg): ₹1,740.50 (increased by ₹49 on February 1 via monthly revision).

What Was the Major GST Change for Fuel-Based Vehicles?

The Goods and Services Tax (GST) rates for passenger cars were significantly changed by the Budget:

• GST Reduction for Small Cars: The GST rate on small petrol, diesel, CNG, and LPG cars (with engine ≤1200cc-1500cc and length ≤4000mm) was reduced from 28% to 18%.
• GST Increase for Luxury/Hybrid Cars: The GST rate on luxury cars and larger hybrids was increased from 28% to 40%.

Were There Other Related Energy Announcements?

While traditional fuel taxes were untouched, the Budget promoted cleaner energy alternatives:

Aviation Turbine Fuel (ATF): Oil Marketing Companies reduced ATF prices to ₹91,393.39 per kilolitre in Delhi on February 1, separate from the Budget.

Energy Transition: The government exempted basic customs duty on energy transition equipment and solar glass inputs to encourage a shift from fossil fuels.

Why Weren't Petrol and Diesel Brought Under GST?

Despite longstanding industry demands, the Finance Minister did not propose bringing petrol and diesel under the GST regime. This maintains the current tax structure to safeguard combined state and central government revenues from these fuels.

FAQs: Fuel and Vehicle Taxes in Budget 2026

Q: Did the Budget change petrol or diesel prices?

A: No direct change to central excise duties was announced. Retail prices remain as per the daily revision mechanism of oil marketing companies.

Q: What is the new GST rate for small petrol cars?

A: The GST rate for qualifying small petrol, diesel, CNG, and LPG vehicles has been decreased from 28% to 18%.

Q: Is commercial LPG cheaper after the Budget?

A: The price of a 19 kg commercial LPG cylinder in Delhi increased by ₹49 on February 1, 2026, as part of a routine monthly modification.