North India Statesman
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UPI Tax Notice: There is anger among small traders and street vendors of Karnataka as they are receiving GST notices based on UPI transactions. Due to this notice, many traders have stopped the UPI payment and started returning to cash payment. On the same issue, trade associations have announced a statewide strike on 25 July, which raises questions on the claims of Digital India. What is the entire case? The Commercial Tax Department of Karnataka has sent a notice to about 14,000 small traders based on the data of UPI transactions. The notice states that it is mandatory to register GST for traders who have an annual turnover of Rs 40 lakh (for the sale of goods) or Rs 20 lakh (for services). However, many traders claim that their income is much lower than this limit, and UPI transactions also include the money received from family or friends, which is not a commercial income. Noteis has sought outstanding tax from 2021-22 to 2024-25, which reaches lakhs of rupees in some cases. Due to this, there is an atmosphere of fear among small traders like coconut sellers, flowers sellers, tea-breakfast truck drivers and vegetable traders. The anger of the businessmen and the threat of strike, the personnel of the Personnel Council (KKP) and the Federation of Karnataka Chambers of Commerce and Industry have described this notice as unfair. Ravi Shetty Beondur of KKP said, “We have given time to the government to withdraw the notice by this evening, otherwise the statewide shutdown will be announced on 25 July.” Traders say that he used the convenience of customers and UPI under the banner of Digital India, but now it has become a problem for them. Many traders have removed the UPI QR code and installed the boards of No UPI, only cash. He also said that traders who only sell GST-free goods like milk, bread, fruits, vegetables and coconut do not need to be registered or paid taxes. The department has launched a ‘GST’ campaign, which aims to make traders aware of GST rules. Commissioner Vipul Bansal said, “Our aim is only to register them, not harassing the traders. It is not a demand to notice, but to ask for details of the transaction.” The department has also issued a helpline number 1800 425 6300, where traders can file their complaints. Political tension has started on the issue of political tussle between the Congress government and the opposition BJP. The BJP alleges that the Congress government is trying to hide the financial failure of the state by targeting small traders. At the same time, the Congress has held the GST policies of the central government responsible for this. Digital India is the second largest state in the case of UPI transactions in the country, which will have a 7.73% stake in total UPI transactions by May 2025. Due to this notice, many traders are closing UPI, causing damage to the digital payment system. Experts believe that if this problem is not resolved properly, a similar situation may arise in other states. Experts and business associations say that the government should simplify GST rules for small traders and guide them in the registration process. In particular, traders selling GST-free goods require clear guidelines to protect them from such notices.
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