Karnataka vendors demand relief after GST notice over UPI transactions

In Bengaluru and beyond, small vendors are switching to cash after receiving GST notices for UPI transactions over ₹40 lakh; associations call for urgent government intervention

Small vendors and traders across Karnataka are urging the government to withdraw recent Goods and Services Tax (GST) notices issued over UPI transactions exceeding ₹40 lakh per annum, warning that stringent enforcement of the rule threatens the viability of their small-scale businesses, news agency ANI reported.

 

Under GST regulations, shops must register themselves if their annual turnover exceeds ₹40 lakh, while service providers face a ₹20 lakh threshold.

 

Vendors appeal for relief

 

Abhilash Shetty, of the Karnataka Pradesh Street Vendors Association, told ANI, “Small businesses run with a margin of 5 to 10 per cent. The tax (GST) along with other things like penalty, comes to 50 percent, and it is not possible for the vendors to pay such a huge tax. We request the government to intervene and give relaxation to small vendors in this matter.”

 

Advocate Shakuntala, the association’s legal representative, criticised the government for not educating small vendors about their tax obligations at the time of registration. She stated that if taxes were to be levied, people should have been informed in advance. She added that vendors ought to have been made aware of taxes on the sale of goods and revenue generation.

 

Karnataka vegetable vendor served ₹29 lakh GST notice

 

In Haveri, a vegetable trader named Shankar Gowda Hadimani received a ₹29 lakh tax notice from the Bengaluru Tax Office. He stated that, since there were no GST rules applicable to fruits and vegetables, he had not registered for a GST number. However, GST officials reported that his total digital transactions over four years totalled ₹1.63 crore, triggering a GST liability.  He added that officials had assured him the notice would be withdrawn if it was proven that the business was indeed related to vegetables.

 

'No UPI, only cash'

 

Neighbourhood vendors and small roadside stall owners in Bengaluru are reverting to cash transactions to avoid issues with tax authorities. Instead of displaying QR codes, many now place signs stating “No UPI, only cash,” as reported by The Economic Times. Stall owners also said they fear harassment by tax officials or even eviction from their vending spots by city authorities. As a result, many have ceased using digital payments.

 

ITR filing requirements for small vendors

 

Small vendors in India must file an Income Tax Return (ITR) if their annual income exceeds the basic exemption limit of ₹2.5 lakh. Those with business income under ₹50 lakh who choose the presumptive taxation scheme should use ITR-4 (Sugam). Under this scheme, vendors declare a fixed percentage of their turnover as profit, simplifying compliance.