 "Cash makes a comeback in Bengaluru as vendors ditch UPI amid GST fears")
UPI continues to dominate digital transactions across most Indian cities. But cash is making a comeback on the streets of Bengaluru. Neighbourhood vendors and small roadside stall owners of the city are turning to cash transactions again, citing rising “risks” associated with UPI payments. Instead of QR codes, signs reading “No UPI, only cash” are now seen among small-scale traders in Bengaluru, according to a report by The Economic Times.
The reason? Fear of getting into trouble with tax authorities. According to the news report, many vendors have recently received notices under the Goods and Services Tax (GST) regime. Some of these notices were issued even to small businesses that are not even registered under GST, with tax demands reportedly running into lakhs of rupees.
Many vendors in Bengaluru now believe that the convenience of digital payments has drawn unwelcome attention from tax officials. Shankar, who runs a roadside shop in Horamavu in Bengaluru, told The Economic Times that he makes about ₹3,000 a day and survives on the little profit he earns. He said he has stopped using UPI because he cannot afford any more tax-related stress.
Lawyers, traders, and accountants have also noted that vendors fear being forced into the tax system if they continue using UPI. As a result, many are switching back to cash.
Fear of eviction and harassment
Vendors in the city are not just scared of tax issues. Vinay K Sreenivasa, a member of the Federation of Bengaluru Street Vendors Associations, said that they also fear harassment by tax officials or even being removed from their vending location by the city authorities. As a result, many have stopped using digital payments completely.
According to GST rules, shops that sell goods must register if their yearly sales cross ₹40 lakh. For service businesses, the limit is ₹20 lakh.
Tax department defends notices
Karnataka commercial taxes department said they only sent GST notices to businesses whose UPI records from 2021-22 showed earnings higher than the legal limits. They said such businesses must register and pay GST, The Economic Times mentioned. The department said that such businesses must register, disclose their taxable income, and pay GST accordingly.
UPI still dominates MSME transactions
Despite regional concerns, UPI remains a dominant mode of digital transactions among India’s micro, small and medium enterprises (MSMEs). According to PayNearby’s MSME Digital Index Report, 48 per cent of MSMEs use UPI, while 39 per cent rely on Aadhaar-enabled banking. Among women-led enterprises, Aadhaar-based payments are even more popular at 42 per cent.
The findings are based on a nationwide survey of 10,000 small businesses, including kirana stores, medical shops, and travel agencies. The report also revealed that 71 per cent of users now rely on smartphones for business, with even higher adoption among women at 84 per cent.
More than 73 per cent of MSMEs in rural and semi-urban areas said they have seen improved operations or earnings since switching to digital tools.