My request has been resolved by AWS Support with following issue description :
From the public docs, "When you create an EC2 instance with AWS CloudFormation using the resource AWS::EC2::Instance, AWS CloudFormation makes two API calls: RunInstances and CreateTags. RunInstances creates the instance and CreateTags applies the necessary tags after the instance is created. The RunInstances request made by AWS CloudFormation doesn't support the tags, but the API does support the tags." Please refer to  for more information on the same.
So, the workaround for this issue is using "AWS::EC2::LaunchTemplate" resource for EC2 Instance and specify the required Tags on the Volume using "TagSpecification" property in "AWS::EC2::LaunchTemplate" resource. Please refer  for more information.
We can specify the required Tags for the resources as below.
Instance: Type: 'AWS::EC2::Instance' Properties: LaunchTemplate: LaunchTemplateId: !Ref RequiredTagsLaunchTemplate Version: 1 InstanceType: r4.xlarge . . RequiredTagsLaunchTemplate: Type: 'AWS::EC2::LaunchTemplate' Properties: LaunchTemplateData: TagSpecifications: - ResourceType: Volume Tags: - Key: Env Value: Dev
I hope this information will be useful for somebody.
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