Most customers pay though UPI or other digital wallets. He got into trouble once the GST officials sent him a notice claiming he had made transactions worth Rs 1.63 crore in four years and now owes Rs 29 lakh as GST.
The vendor says he buys fresh vegetables from farmers and sells in his small shop. He says most customers prefer UPI as they rarely carry cash these days, adding that he files income tax returns every year and keeps a proper record.
“I procure vegetables from the farmers and sell the produce at the small shop I own near Municipal High School grounds. Nowadays, customers favour UPI payments. I promptly file I-T returns every year. I have records for the same. The GST officials have served a tax demand of Rs 29 lakh. How can I pay such a huge amount?” Deccan Herald quotes Shankargouda.
According to ClearTax, fresh and chilled vegetables are not taxed under GST. If a vendor buys vegetables directly from farmers and sells them fresh and unprocessed, there is no GST on that.
Small vendors turn back to cash
Once a stronghold of digital payments, Bengaluru is now witnessing a growing shift back to cash transactions. Small shopkeepers and street vendors across the city are removing QR codes and replacing them with hand-written signs that read “No UPI, only cash.” The switch is being driven by concerns over tax notices and regulatory scrutiny.
According to an report by ET, several vendors who previously preferred Unified Payments Interface (UPI) for convenience now say digital transactions have brought them under the lens of the Goods and Services Tax (GST) department.
Lawyers, chartered accountants, and vendors told The Economic Times that thousands of unregistered businesses in Bengaluru—including roadside food stalls, push carts, and corner stores—have received GST notices. Some notices include tax demands running into lakhs of rupees.
Department warns vendors
The Karnataka GST Department on July 17 said they know traders are avoiding UPI and shifting to cash and warned that tax applies on the total money received, whether by UPI or cash. Officials said they will take action to recover tax if traders try to hide their real income, the report mentioned.
Small vendors affected
Recent GST checks and notices are leaving small traders worried and confused. Many feel caught in a tough spot, forced to choose between accepting digital payments and facing huge tax demands they cannot afford.
