Karnataka vendor gets Rs 29 lakh GST notice on Rs 1.63 crore UPI transactions, protests erupt

The dispute stems from GST notices sent to over 14,000 traders after their UPI transactions allegedly revealed turnovers exceeding the taxable threshold (Rs 40 lakh for goods and Rs 20 lakh for services).

Small traders in Bengaluru are poised to launch a three-day strike starting July 23, in a widespread protest against Goods and Services Tax (GST) notices linked to their Unified Payments Interface (UPI) transactions. The agitation comes amidst widespread panic, exemplified by a vegetable vendor in Haveri who received a staggering demand for Rs 29 lakh in GST arrears for transactions totaling Rs 1.63 crore over the last four years.

Shankargouda Hadimani, the vegetable vendor, who relied heavily on UPI and e-wallets, expressed shock at the notice. "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," he told Deccan Herald. "The GST officials have served a tax demand of Rs 29 lakh. How can I pay such a huge amount?" Following the demand, Hadimani has reportedly stopped accepting UPI payments.

The dispute stems from GST notices sent to over 14,000 traders after their UPI transactions allegedly revealed turnovers exceeding the taxable threshold (Rs 40 lakh for goods and Rs 20 lakh for services). Some vendors were reportedly asked to pay arrears nearing Rs 40 lakh, prompting many to switch back to cash payments.

The protesting traders, including milk vendors and bakery owners, plan to wear black badges while suspending sales of milk and milk-based products on July 23 and 24. The protest will culminate in a "bandh" (shutdown) at Freedom Park on July 25, with support from cab and auto drivers who fear similar GST scrutiny on their digital transactions.

Ravi Shetty Byndoor, president of the Karnataka Labour Council, has condemned the move as "arbitrary and illegal." He argues that UPI transactions often include personal payments and may not accurately reflect actual business income. Shetty critically noted that "The commercial taxes department was in a slumber since GST rolled out in 2017 and has suddenly woken up to claim arrears."

In response to the growing concerns and planned protests, the Karnataka government has rolled out a statewide awareness campaign titled "Know GST" to educate traders and address their grievances.