SGST Expansion:The Uttarakhand government is considering expanding the scope of the State Goods and Services Tax (SGST) to include businesses like homestays, event management services, salons, and parlors. This initiative aims to enhance state revenue as part of broader financial strategies discussed in a recent meeting led by Chief Minister Pushkar Singh Dhami.
Government’s Strategy for SGST ExpansionScope
The proposal to levy SGST on these sectors reflects the rapid growth in these industries over the past few years. The Finance Department has been directed to explore possibilities for expanding SGST and increasing revenue collection.
Introduction of AI-Based Diagnostic Systems
To curb tax evasion, the government is also evaluating the implementation of an AI-based diagnostic system under the Central GST (CGST) framework. This system would detect irregularities automatically, providing a more efficient way to target tax evasion, especially for high-revenue defaulters.
Promoting Rental Agreements to Boost Revenue
Another key strategy discussed is incentivizing formal rental agreements by reducing stamp duty rates. Encouraging documented rental agreements can enhance revenue through increased stamp duty collection.
Impact on Businesses and Revenue Growth
- Homestays and Event Management: These sectors, which have experienced significant growth, could soon be required to comply with SGST regulations.
- Salons and Parlors: Extending SGST to personal care services would further broaden the tax base.
- Increased Revenue: Both the SGST expansion and improved compliance via AI systems are expected to enhance government revenue and reduce tax leakage.
Conclusion
The Uttarakhand government’s move to the SGST expansion scope highlights its commitment to fiscal responsibility. By including growing sectors like homestays and salons, and leveraging AI to combat tax evasion, the state aims to achieve both economic growth and efficient tax management. These measures, if implemented, could significantly boost revenue while ensuring compliance in emerging industries.
