Bengaluru, July 12, 2025: Karnataka Commercial Tax Department has initiated a crackdown on traders who have not complied with GST regulations despite making more than Rs 40 lakh in annual earnings through UPI transactions. This action comes to light as multiple businesses in Bengaluru have reported receiving notices from the authority.
Officials from the department revealed that data pertaining to UPI payments received by traders during the financial years 2021-22 to 2024-25 has been sourced from UPI service providers. It was found that the actual turnover of these traders is often higher than the reported figures due to additional income from cash and digital transactions.
Consequently, notices have been served to traders whose UPI earnings surpass Rs 40 lakh, yet they remain unregistered for GST and have not paid the due taxes. These businesses are now required to provide detailed information on the goods and services they have sold and to settle the correct tax amount, as per the department's instructions.
Under the GST Act, which was implemented across India on July 1, 2017, it is obligatory for suppliers with an annual turnover exceeding Rs 40 lakh for goods or Rs 20 lakh for services to register for GST. This rule encompasses both taxable and non-taxable goods and services in the aggregate calculation.
Small Traders in the Spotlight
For small-scale vendors, recent GST notices have served as an unexpected shock. Several, such as Manjunath, a street-food seller in Bengaluru's Muneshwara block, have asserted their ignorance regarding GST registration prerequisites. "My income from UPI transactions is reasonable, but I was oblivious to the GST registration obligation," Manjunath stated, having received a notice the preceding week. The authorities have called for immediate compliance, emphasizing that small enterprises with annual turnovers not exceeding Rs 1.5 crore may avail themselves of the Composition Scheme, which involves a straightforward 1% tax payment.
Relief for Compliant Vendors
The department is providing guidance to facilitate compliance, as stated by an official, who assured that the objective is not to harass small traders but to establish an equitable business environment. They emphasized that the initiative is focused on combating tax evasion and motivating small-scale entrepreneurs to formalize their operations. For further information on registration and associated tax responsibilities, traders are directed to visit the website gst.kar.nic.in. This action is intended to bolster fair competition within the dynamic small-scale trade sector of Karnataka.
Keywords: GST evasion, Karnataka tax department, small vendors, UPI payments, small businessmen, GST registration, Composition Scheme, Bengaluru traders, tax compliance, digital payments
