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‘Digital Nightmare’: Karnataka Traders Face GST Heat Over UPI Payments, Protests Erupt As Traders Receive Hefty Tax Notices

Karnataka traders protest hefty GST notices on UPI payments, calling them unfair and disproportionate; shutdown planned, public outrage grows.

Karnataka is experiencing growing public ire as thousands of small traders and street vendors struggle under what they refer to as “unfair” and “crippling” GST notices associated with online transactions. From across the state, tea stalls, fruit vendors, and small shopkeepers have complained of getting backdated tax demands – some amounting to as much as Rs 39 lakh – after officials marked UPI-based transactions as suspected tax evasions.

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Most of these traders, already running on thin margins and struggling with cash, claim the notices are out of proportion to their revenues and imperil their very existence. The anger has mounted to statewide protests and calls for a shutdown. Both citizens and traders are demanding swift government intervention.

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The matter came to light after several traders received GST notices on WhatsApp, which blamed them for failing to register under the tax regime despite apparently doing business worth more than Rs 1 crore in digital transactions. Most vendors claim they had no idea that UPI receipts would be counted as turnover, particularly when selling non-taxable products like fruits and vegetables.

Karnataka State Karmika Parishat President Dr. Ravi Shetty Byndoor has demanded a total shutdown on July 25 and organised a protest in Freedom Park in Bengaluru. “Small traders from Yelahanka and Nagarbhavi have received notices of Rs 39 lakh and Rs 33 lakh,” said Dr. Shetty, terming the move as a “digital nightmare.”

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Street vendor unions have lent their weight to the cause. “A small enterprise with a value of Rs 20 lakh is being expected to pay lakhs in taxes,” complained Abhilash Shetty of the Karnataka Pradesh Street Vendors Association. “With profit margins of barely 5–10%, such an expectation is unrealistic.”

A Haveri vegetable trader, Shankar Gowda Hadimani, got a notice for Rs 29 lakh. “There’s no GST on vegetables. I didn’t register for GST. But the tax office is asking me to pay for business worth more than Rs 40 lakh,” he stated.

Chief Minister Siddaramaiah has taken cognisance of the problem and summoned GST and Commercial Tax officials to his house to discuss the issue. The Centre has been blamed by the state government for targeting poor traders by tracking UPI payments digitally.

While this, the BJP retaliated stating that the Congress government is to blame for the mayhem. BJP leader C.T. Ravi accused the state of abusing GST to instill fear and destabilise Digital India. BJP MLC Arun Kumar also stated that close to 14,000 vendors have been affected and are being compelled to take down QR codes from their stores.

KPCC spokesman M. Lakshmana, however, rebutted these accusations, arguing that GST is a Centre’s domain. Citing Section 22 of the GST Act, he explained that only persons with a turnover of over Rs 40 lakh require registration. He also told critics that Congress MP Rahul Gandhi had previously warned of the nature of GST, famously labelling it “Gabbar Singh Tax” for hitting the poor.

As both governments exchange blame and protests rise, Karnataka’s small vendors are calling for clarity, relief, and a system that does not punish them for being digital.

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ABOUT THE AUTHOR

Aditya Mallick

Aditya Mallick

Senior Sub-Editor (Sports)

Aditya Mallick is a Senior Sub-Editor (Sports) with over 4+ years of experience covering a wide range of sports, including cricket and football. His in-depth coverage of major sporting events such as ICC Cricket tournaments and prominent football leagues demonstrates his expertise in the field. Aditya holds a Bachelor of Business Administration from Maharshi Dayanand University and has contributed to leading media outlets like Zee News and The Times of India. Aditya's articles undergo rigorous fact-checking by a dedicated News Desk team before publication, ensuring accuracy and reliability. His commitment to journalistic integrity has made him a trusted voice in sports media. Beyond the newsroom, Aditya actively engages with the sporting community and is a member of various sports journalism and media associations. Feel free to connect with him on LinkedIn to stay updated with his latest insights and contributions to sports journalism.

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First published on: Jul 23, 2025 03:12 PM IST


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