Discuss in detail the Salient Features of Service Tax.

Service tax is a form of indirect tax imposed by the government on certain specified services provided by service providers. It is governed by the Finance Act, 1994, and is levied on the value of taxable services rendered by service providers. Here are the salient features of service tax:

1. Levy and Scope: Service tax is levied on the provision of specified services as listed in the Finance Act, 1994. The scope of taxable services has evolved over time, covering a wide range of services including banking and financial services, telecommunications, transportation, hospitality, consultancy, advertising, and more. The tax is imposed on the value of taxable services provided by service providers in India.

2. Taxable Event: The taxable event in service tax is the rendering of taxable services by a service provider to a service recipient. The tax liability arises at the time when the service is provided or agreed to be provided, whichever is earlier. This means that the service tax is applicable at the time of invoicing or receipt of payment, whichever is earlier.

3. Registration: Service providers whose aggregate value of taxable services exceeds the threshold limit prescribed by the government are required to register for service tax with the relevant tax authorities. Upon registration, service providers are allotted a unique Service Tax Registration Number (STN), which is used for compliance and reporting purposes.

4. Taxable Value and Rate: Service tax is levied on the taxable value of services provided. The taxable value is generally the gross amount charged by the service provider for the services rendered, excluding certain specified deductions or abatements, if any. The rate of service tax is prescribed by the government and is subject to change from time to time. It is usually expressed as a percentage of the taxable value of services.

5. Reverse Charge Mechanism: In certain cases, the liability to pay service tax may be shifted from the service provider to the service recipient under the reverse charge mechanism. This mechanism applies to specified services and situations as notified by the government. When the reverse charge mechanism applies, the service recipient is required to pay service tax directly to the government on behalf of the service provider.

6. Input Tax Credit: Service tax paid on input services used in the course of providing taxable services is eligible for input tax credit (ITC). Service providers can avail ITC on service tax paid on input services such as rent, advertising, professional fees, etc., subject to certain conditions and restrictions prescribed under the law.

7. Compliance and Filing: Service tax compliance involves various requirements such as maintenance of records, issuance of invoices, payment of tax, filing of returns, and undergoing audits and assessments by tax authorities. Service providers are required to file periodic service tax returns, typically on a half-yearly basis, and pay the tax due within the prescribed timelines.

Overall, service tax is an important source of revenue for the government and plays a significant role in the taxation of services provided in India. Its salient features encompass the levy, scope, registration, taxable value, rate, reverse charge mechanism, input tax credit, and compliance requirements applicable to service providers and recipients alike.