Starting Monday, the daily economic burdens of millions of Indians could ease slightly.
Staples like milk and bread, life and medical insurance and life-saving drugs will become tax-free. Consumption tax on small cars, television sets and air conditioners will drop from 28% to 18%. And other common goods like hair oil, toilet soap and shampoo will be taxed at a marginal 5% instead of 12% or 18%.
The sweeping cuts are part of Prime Minister Narendra Modi's major overhaul of India's complex goods and services tax (GST) regime announced earlier this month. This is expected to both simplify the tax code and give flagging household consumption - which makes up over half of India's gross domestic product (GDP) - a much-needed fillip.
The timing couldn't be more opportune.
Lower GST rates coincide with the beginning of a long festive season when Indians typically open their purse strings to buy everything from new cars to clothes.
This four-month period also brings in a bulk of yearly sales for consumer goods companies such as packaged food makers and apparel manufacturers.
The hope is, reduced taxes will mitigate some of the impact of the US's bruising 50% tariffs on India, leave people with more money to spend, and spruce up the domestic economy.
The cuts come off the back of a $12bn income tax giveaway announced in February and lower interest rates from India's central bank, all of which bode well for a consumption pick-up.
Companies, including Reliance, consumer staples giant HUL, and automaker Mahindra & Mahindra will pass on lower taxes to consumers to boost demand.
Carmakers are banking on the cuts, with share prices up 6-17% since Modi's August announcement, while dealerships report rising enquiries amid unsold inventory.
At a Mumbai showroom of Hero Motocorp, India's largest motorbike manufacturer, a dealer told the BBC that he expected sales to jump 30–40% over the next two months compared to last year.
Easing the cost burden of first-time owners has increased enquiries and footfall, said Ashutosh Varma, Hero India's chief business officer. This is especially so for cheaper variants, he indicated, where price sensitivity is the highest.
Companies that make consumer goods are also upbeat about a pick-up in demand.
Sabyasachi Gupta of Godrej Enterprises suggested that the tax cuts coupled with a good harvest could expand the market for discretionary goods like air-conditioners beyond the metro cities.
Despite the positive outlook, challenges remain in communication of the tax changes. Many smaller brands and shopkeepers appear unaware of the updates, struggling to implement new pricing and production measures swiftly.
In Mumbai's Crawford Market, the city's largest hub for wholesale and retail, few shopkeepers were aware of changes to GST slabs. Those who were knowledgeable were often confused about how to adjust their pricing. This gap in communication may lead to delays in benefits reaching consumers.
