Bengaluru Vendors Ditch UPI for Cash Amid GST Heat
- Bengaluru vendors are rejecting UPI payments and shifting to cash to avoid GST scrutiny and tax notices.
- GST officials issued notices based on UPI transaction data indicating turnover above registration limits, triggering fear among small, unregistered businesses.
- Experts and opposition leaders question the approach, citing that not all UPI credits are business income, and call for government intervention.
In a growing trend across Bengaluru, small vendors and shopkeepers are turning away from digital payments and insisting on cash transactions to avoid scrutiny from tax authorities. Stickers and handwritten signs reading 'No UPI, only cash' have started appearing at tea stalls, pushcarts, and local shops across the city.
The shift comes in the wake of GST notices issued to thousands of unregistered micro-businesses whose UPI transaction data reportedly indicated annual turnovers beyond the threshold for mandatory GST registration. Under current rules, businesses selling goods must register for GST if their turnover exceeds Rs 40 lakh, while service providers have a lower threshold of Rs 20 lakh.
Many vendors say the pressure from tax authorities and the fear of eviction by civic bodies have forced them to revert to cash. “I make around Rs 3,000 a day. The profit is just enough to live on. I can’t risk GST notices”, said Shankar, a local shopkeeper in Horamavu, quoted in a report by The Times of India.
Advocate Vinay K. Sreenivasa, joint secretary of the Federation of Bengaluru Street Vendors Associations, said the move to digital payments had empowered vendors initially, but rising tax scrutiny has reversed that shift. Some vendors are now facing tax demands amounting to several lakhs of rupees, many of which they contest.
While the commercial taxes department clarified that notices were only issued where UPI data since 2021-22 suggested turnover breaches, experts argue that not all UPI transactions qualify as business income. “A lot of it could be informal loans or family transfers”, said Sreenivasan Ramakrishnan, a chartered accountant.
Former Additional Commissioner of Commercial Taxes H.D. Arun Kumar noted that tax officers cannot assume turnover based on transaction data alone. “The burden of proof lies with the officer, not the vendor”, he said.
Amid public concern, Opposition MLA S. Suresh Kumar has said he will write to Chief Minister Siddaramaiah, seeking intervention to protect small vendors.
With Karnataka’s revenue target set at Rs 1.20 lakh crore for 2025–26, and welfare schemes demanding Rs 52,000 crore, tax officials are under intense pressure. As Bengaluru becomes a potential test case for GST enforcement via UPI data, other states may soon follow suit.
