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Electric vehicle (EV) manufacturers on Friday hailed the GST Council's decision that EVs with or without battery pack will now be taxed at 5 per cent.

At present, e-vehicles are taxed at 5 per cent while lithium-ion batteries are taxed at 18 per cent.

The decision was taken at the GST Council's 47th meeting in Chandigarh on June 28-29, chaired by Union Finance Minister Nirmala Sitharaman.

"Electric vehicles, whether or not fitted with a battery pack, are eligible for the concessional GST rate of 5 per cent," a ministry statement read.

Akshit Bansal, CEO of electric vehicle (EV) charging network provider Statiq, said that the government has declared a clear intention to boost domestic EV adoption and usage by making the industry eligible for a concessional GST rate of 5 per cent.

"This move will encourage the industry to pass on more cost benefits to the users and also lend a necessary push to people who are still looking for incentives to adapt to the EV way-of-life," Bansal told IANS.

"I welcome this move of industry-wide GST reduction to 5 per cent and thank the government for helping us bridge the gap between the possible adoption of EVs and a real-life rise in its adoption," he added.

Battery price makes up as much as 50 per cent of an electric vehicle's cost.

In 2018, the GST rate on lithium-ion batteries was slashed from 28 per cent to 18 per cent.

In December last year, then NITI Aayog CEO Amitabh Kant said the government was working on reducing GST on EV batteries.