Currently, a tax of six per cent is levied on rides booked through cab aggregators.
"Such reduction is a welcome move for cab aggregators and consumers considering the increased demand of services of cab aggregators," Deloitte Haskins & Sells Senior Director Saloni Roy said.
It shall accordingly provide a further boost to the already thriving operations of cab aggregators, she added.
The introduction of services by cab aggregators has seen manifold growth due to the ease and reasonableness of prices at which the services are offered.
"The GST rate on cab aggregators is proposed to be at 5 per cent as compared to the current abated service tax rate of 6 per cent. This is the rate closest in the various bands of GST rates of 5, 12, 18 and 28 per cent," Mr Roy said.
Amit Jain, President of Uber India and South Asia also welcomed the move.
"By ensuring that the new rate structure is not inflationary, the government has demonstrated its pro-consumer, pro-business stance," he said.
Ola did not respond to emailed queries.