GST heat drives Karnataka’s small traders away from UPI (This is an AI-generated image)
Bengaluru: As Bengaluru small traders threaten to go on a three-day strike from July 23, the Karnataka government has launched a statewide outreach programme to create awareness about GST. These traders are demanding the withdrawal of GST notices that were served to them, tracking with the help of Unified Payments Interface (UPI) transactions. Notably, many vendors since then have refused to accept UPI payments and have only been accepting cash. In order to break this impasse, the state government has launched the “Know GST” campaign and its first workshop held in Koramangala on Monday.
“The notices have come as a shocker to small businessmen. The small traders will not sell milk and milk-based products on July 23-24 and do their business wearing a black badge,” Karnataka labour council president Ravi Shetty Byndoor, along with other office bearers, told the media.
However, the GST rules mandate that traders who have a turnover exceeding Rs 40 lakhs for goods and Rs 20 lakhs for services must register themselves. The matter escalated when over 14,000 traders were tracked using UPI payments, and it was revealed that many had accepted payments beyond these thresholds. The tax department sent notices to many vendors, and some of these small traders were asked to pay taxes reaching close to Rs 40 lakh. This led to vendors refusing to accept UPI payments and opting for a cash-only mode.
“Most traders who received notices are owners of bakeries and condiment stores. UPI transactions include personal payments too, so they don’t reflect business exactly. The commercial taxes department was in a slumber since GST rolled out in 2017 and has suddenly woken up to claim arrears. The move is arbitrary and illegal,” Shetty Byndur said.
Bengaluru Street Vendors to Stage 3-Day Protest Against GST Notices on UPI Payments
A Bengaluru-based organisation announced on Monday that small merchants and street vendors will launch a three-day protest starting July 23, culminating in a bandh on July 25 at Freedom Park.
Cab and auto drivers, who also accept UPI payments, have extended their support, with Cab Drivers Association president Sadananda Swamy warning that drivers may soon face similar GST scrutiny.
Responding to the backlash, Karnataka Chief Minister Siddaramaiah, who also holds the finance portfolio, has assured traders that he will raise the issue with the Centre in the upcoming GST Council meeting. He has also instructed officials to resolve traders’ concerns, launching a ‘Know GST’ campaign to educate small merchants on tax compliance.
“The objective is just to get eligible traders registered. Misinformation is being spread by people with vested interests. The notices we served aren’t tax demands — we haven’t assessed the tax yet. We are only asking traders to submit transaction details,” TOI quoted commercial taxes commissioner Vipul Bansal.
Small Traders Unhappy With GST Clarification, Call for Relief
Despite the Karnataka Commercial Taxes Department launching a helpline (1800 425 6300) and planning statewide GST workshops, small traders remain dissatisfied over recent GST notices for UPI-based payments. Many vendors allege harassment and say they’ve been threatened with penalties for non-compliance dating back to 2021–22.
Trade bodies like FKCCI have backed the protest, calling the tax demands unfair without proper education. At a department-organised session attended by over 70 traders, officials said they were merely implementing central GST rules from 2017. However, traders said the clarifications were vague and failed to offer concrete relief.
Vendors highlighted that falling profits, high competition, and sudden tax enforcement are making business unsustainable. Some questioned the threshold limits, while others claimed to have received notices despite earning below taxable income levels.
Officials urged traders to present proof and submit representations via associations like FKCCI for government consideration.