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%. 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.

Companies, including Reliance, consumer staples giant HUL, and automaker Mahindra & Mahindra, are poised to 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 inquiries amid unsold inventory.

At a Mumbai showroom, a dealer reported expected sales jumps of 30–40% over the next two months compared to last year due to easing ownership costs.

However, the tax cuts will also lead to challenges. Smaller brands and shopkeepers are struggling to keep up with the changes. Many are still unaware or confused about the new tax rules, which may lead to a chaotic adjustment period.

Overall, experts predict that the tax cuts will benefit a third of an average consumer's monthly expenditure basket, boosting the middle class's purchasing power, but caution that the cost to the government could be significant.