A vegetable seller named Shankar Gowda Hadimani from Haveri, Karnataka, recently received a ₹29 lakh GST notice from the Bengaluru Tax Office. Hadimani was shocked because he says he doesn’t have a GST registration, as fruits and vegetables are exempt from GST.
He told “There are no GST rules for fruits and vegetables, so I didn’t register for GST. But I got a ₹29 lakh tax notice for doing business over ₹40 lakh. The officials said if it’s confirmed that my business is only in vegetables, the notice will be cancelled.”
Why Did This Happen?
Hadimani’s case is just one of nearly 6,000 GST notices sent out across Karnataka based on UPI transaction data. Tax officers are checking if people have crossed the GST registration limit — ₹20 lakh per year for services and ₹40 lakh for goods. If someone crosses this limit, they must register for GST.
Joint Commissioner Meera Suresh Pandit clarified that these notices are not final tax demands. People can reply with documents to prove their case. If the goods or services are GST-exempt, the notice will be withdrawn.
She explained that UPI data helps identify traders who might be avoiding GST registration, especially when their annual digital transactions are above the limit.
Traders Raise Concerns
Trade activist Sajjanraj Mehta said many small traders were confused and scared because they didn’t get any prior warning. He pointed out that UPI transactions often include both business and personal payments, and it’s not fair to treat the total as business income without checking.
He also criticized the department for not checking whether the items are exempt, like vegetables or unbranded food items, before sending notices. He said, “A smarter approach using clear data would have avoided this panic.”
Also See: India Crosses 1.52 Cr GST Registrations; 1 in 5 Businesses Involve Women: SBI
Shift Away from UPI
Due to fear of getting GST notices, many small shopkeepers in Bengaluru and Mysuru are stopping UPI payments and going back to cash transactions. But in cities, tech-savvy customers still prefer digital payments.
Traders are now demanding:
- Clear guidelines on how UPI and GST are linked
- A way to explain or contest notices without facing penalties
- Awareness programs in local languages to educate small vendors
Digital payments like UPI are making it easier for tax authorities to track business turnover. But without clear rules and proper awareness, small traders may suffer, even when they are selling tax-exempt items.
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