A poster displayed in front of a shop reads: “No PhonePe or Google Pay, only cash accepted.”
PC: @harishRCB2024
Small traders across Karnataka – including condiments, bakeries, tea and coffee shops – have threatened a statewide shutdown on July 25 in protest against the GST demand notices issued by the Commercial Tax Department.
Ravi Shetty Byndoor of Karnataka State Karmika Parishat told Moneycontrol, “We’ve given the state government time till July 24 to withdraw the notices. If there’s no response, traders will go ahead with the bandh on July 25. As a mark of protest, sale of milk-based products will be halted on July 23 and 24.”
Also, read: Karnataka’s GST evasion notices prompt shopkeepers to turn down UPI payments
He accused the department of issuing unjustified tax demands amounting to crores of rupees. “Thousands of small businesses – condiments, bakeries, tea stalls, vegetable vendors and roadside shops – have received show-cause notices, with tax dues running into lakhs or even crores,” Shetty alleged.
The association also claimed that the department has warned of action, including seizure of bank accounts and shop closures, if the dues are not cleared by July 21.
Bengaluru alone has over 66,000 condiments and bakeries. A protest is also planned at Freedom Park on July 25, with traders and their families expected to participate.
The uproar follows the Karnataka Commercial Taxes Department’s decision to issue GST notices to traders whose annual UPI turn over exceed Rs 40 lakh. Many small traders in Bengaluru have reportedly removed UPI QR code stickers from their shops, fearing penalties.
Vipul Bansal, Commissioner of Commercial Taxes, told Moneycontrol, “We’ve identified 14,000 such cases. Notices are being sent to those with UPI receipts above Rs 40 lakh. Field officers are verifying registration and compliance status.”
Story continues below Advertisement
He added that the department sourced UPI transaction data from service providers for FY 2021–22 through FY 2024–25. Moneycontrol had first reported the crackdown on July 11.
However, Bansal urged traders not to panic. “Only notices have been issued for now. People can come forward and explain. If someone only sells exempt goods or is under the composition scheme, the tax implication is minimal.”
He pointed out that about one lakh dealers in Karnataka are already under the composition scheme, paying just 1% GST. “It is only fair to ensure everyone complies. The law must be enforced – not selectively ignored,” he said.
Karnataka ranked second in the country for UPI usage in May 2025, accounting for 7.73% of all UPI transactions, behind Maharashtra (13.19%).