Bengaluru Vendors Revert to Cash Amid GST Confusion

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In a surprising turn of events, small vendors in Bengaluru are ditching digital payments through UPI and reverting back to accepting cash only. This shift comes after many of these vendors received notices demanding goods and services tax (GST), leading to confusion and fear of tax scrutiny.

Many neighborhood stores in Bengaluru that once displayed QR code stickers for digital payments now have signs that read, "No UPI, only cash." This change reflects the growing trend among small vendors who are now requesting cash payments from customers instead of using UPI apps.

One such vendor, Shankar, shared his experience of being unable to accept UPI payments anymore due to the fear of tax implications. Thousands of unregistered businessmen in Bengaluru, from neighborhood shops to street food vendors, have received notices demanding GST payments, some of which amount to lakhs of rupees.

The confusion arises from the treatment of digital payment data as income, leading to concerns about tax evasion and possible eviction by civic authorities. The commercial taxes department has issued notices based on UPI transaction data showing a turnover that requires GST registration and payment of taxes.

However, experts like Advocate Vinay K Sreenivasa and former additional commissioner of commercial taxes HD Arun Kumar have raised concerns about the arbitrary tax demands and the burden of proof on the GST authorities. The crackdown on unregistered vendors in Bengaluru could set a precedent for other states to increase tax revenue.

As Karnataka's tax officials strive to meet revenue targets set by the Chief Minister, small vendors in Bengaluru are caught in a dilemma between compliance with tax laws and the pressure to sustain their businesses. The shift back to cash payments highlights the challenges faced by small businesses in navigating the complexities of GST regulations.

In conclusion, the preference for cash over digital payments among small vendors in Bengaluru underscores the need for clarity and support in tax compliance. As states seek to boost tax revenue, it is essential to strike a balance between regulatory enforcement and the sustainability of small businesses in the evolving digital economy.

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