Bengaluru street vendors seek relaxation after receiving GST notices over UPI transactions

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Small vendors and traders across Karnataka have raised serious concerns after receiving GST notices from the commercial tax department for UPI-based transactions exceeding Rs 40 lakh annually. They have requested that the government revoke notices, demanding a relaxation in the enforcement of these rules for small-scale vendors.

Speaking on behalf of the vendors, a member of the Karnataka Pradesh Street Vendors Association, Abhilash Shetty, said, "Small businesses run with a margin of 5 to 10 percent... The tax (GST) along with other things like penalty, comes to 50% and it is not possible for the vendors to pay such a huge tax with this. We request the government to interfere and give relaxation to the small vendors in this matter..."

The association's legal representative, Advocate Shakuntala, echoed the sentiment, criticising the government for failing to educate small vendors about their tax obligations when registering their businesses.

She said, "If taxes are being imposed, why were they not educated first?... When they took the registration, they should have been made aware about the taxes on selling of goods, revenue..."
In Haveri, a vegetable trader named Shankar Gowda Hadimani shared his concern after receiving a ₹29 lakh tax notice from the Bengaluru Tax Office.

He stated, "... Since there are no GST rules on fruits and vegetables, I did not register for GST number. But I got a notice to pay Rs 29 lakh in taxes for a business of over Rs 40 lakh... The officials have told me that if it is proven that I have done so much business in vegetables, the notice will be withdrawn..."

The move to send GST notices for UPI transactions has come under fire from BJP.

On June 16, BJP spokesperson Amit Malviya said, "Congress is destroying small businesses in Karnataka. In a recent mindless crackdown, Karnataka GST authorities have issued heavy-handed notices to small vendors under the pretext of GST evasion -- many running into lakhs of rupees. The data from UPI transactions is being weaponized to raise arbitrary tax demands. As a result, thousands of small traders in Bengaluru are now abandoning digital payments altogether. This is not just harassment -- it is economic sabotage. Under GST law, the burden of proof lies with the tax officer -- not the trader. Why then is the Congress government unleashing this coercion on those who form the backbone of our economy? This is nothing but a desperate attempt to fund their freebie culture. And yet, Rahul Gandhi has the audacity to claim he stands with small businesses."