Why a Karnataka vegetable vendor got a ₹29 lakh GST notice for UPI sales

An unregistered vegetable vendor in Haveri, Karnataka, receives ₹29 lakh GST notice after digital transactions via UPI total ₹1.63 crore over four years

So what if you’re not a registered GST taxpayer? The taxman might still be tracking you. Just ask the vegetable seller from Haveri, Karnataka, who received a GST notice demanding ₹29 lakh in taxes. 

The vendor, Shankargouda Hadimani, is not a registered GST taxpayer and has been running his small shop near the Municipal High School grounds for the past four years, Deccan Herald reported. 

Shankargouda mostly accepted payments through UPI and other digital wallets. According to the GST officials, his total digital transactions over four years added up to ₹1.63 crore, triggering a GST demand, the news report said. 

 

The notice from officials said, “You have done transactions worth ₹1.63 crore in the last four years, for which, you have to pay GST of ₹29 lakh.” 

The tax notice has left Shankargouda in distress. He has now stopped accepting UPI payments altogether. Explaining his situation, he said, “I procure vegetables from the farmers and sell the produce at the small shop I own near Municipal High School grounds. Nowadays, customers favour UPI payments. I promptly file I-T returns every year. I have records for the same. The GST officials have served a tax demand of ₹29 lakh. How can I pay such a huge amount?”

 

Do vegetables attract GST?

In India, fresh and unprocessed vegetables are exempt from GST, meaning they attract a 0 per cent tax rate. This exemption covers fresh, chilled, or unprocessed vegetables, whether sold by farmers or retailers. However, processed vegetables — such as those that are frozen, preserved, packaged, or labelled — may attract GST rates of 5 per cent or higher depending on the item and its preparation.  

For example, dried, pre-packaged, and labelled vegetables usually attract 5 per cent GST, while further processed products can face rates as high as 12 per cent. 

Small vendors in India must file an Income Tax Return (ITR) if their annual income exceeds the basic exemption limit of ₹2.5 lakh. Most small vendors, especially those with business income under ₹50 lakh and opting for the presumptive taxation scheme, should use ITR-4 (Sugam). Under this scheme, vendors can simply declare a fixed percentage of their turnover as profit, easing compliance. 

ITRs can be filed online through the Income Tax Department portal. For FY 24-25, the last date to file ITR is September 15, 2025, unless account audit is required.