Service tax on hiring taxi

In case of Contract Carriages(other than motor cab) for transportation of passengers, Non AC contract carriages are exempt from service tax and taxable only in case of tourism.

AC Contract Carriages are taxable with 60% abatement but Cenvat Credit shall be disallowed.
There is no reverse charge in case of Contract Carriage. Service Provider to pay service tax.

In case you are hiring a motor cab (vehicle for transportation of not more than six passengers), you shall have to pay service tax under reverse charge mechanism if all are satisfied:

(1) Service provider is a HUF, Individual, Firm or AOP loacted in taxable territory
(2) You are a company or body corporate not engaged in similar busniess 

If the Service Provider is claiming abatement, then the service is under full reverse charge, i.e 100% of Service Tax to be paid by you, else it is under partial reverse charge and you have to pay 50 of the amount.

Contact me if you need further suggestions or explanations.

Regards,
 

Dear Shailesh,

In your case you are availing the services of hiring of taxi as as service reciever for official use. Then service provider will charge service tax 40% of taxable value.(i.e. after 60% abatement). He will charge 14.5% service tax on Rs 40,000 

You can avail cenvat credit of service tax amount paid to service provider.