Bengaluru– Once a flagbearer of India’s digital payment revolution, Bengaluru is now witnessing a quiet reversal. Across the city, small vendors are increasingly refusing UPI payments, opting instead for cash-only transactions to evade what they describe as harassment by GST authorities.

Stickers and handwritten notes declaring “No UPI, only cash” have become common across pushcarts, tea stalls, and small shops. Vendors say that UPI transactions have brought them under the radar of tax officials, triggering notices and demands many cannot afford to meet.

“I only earn about ₹3,000 a day. I can’t take the risk anymore,” said Shankar, a shopkeeper in Horamavu, speaking to Economic Times.

Why the Pushback?

Under GST rules, registration is mandatory if:

  • Annual turnover for goods exceeds ₹40 lakh

  • For services, the threshold is ₹20 lakh

    • However, vendors claim they are being unfairly targeted based on UPI data, which often includes personal transfers, informal loans, or help from friends and family — not just business income.

    Advocate Vinay K Sreenivasa from the Federation of Bengaluru Street Vendors Associations said vendors fear both tax scrutiny and eviction by civic bodies. “The switch to cash is a survival strategy,” he said.

    Former tax official HD Arun Kumar added that tax officers cannot assume turnover from digital credits alone — the burden of proof lies with the department.

    Political & Fiscal Implications

    With Karnataka facing a GST collection target of ₹1.2 lakh crore for FY 2025-26 — and CM Siddaramaiah juggling ₹52,000 crore in welfare guarantees — tax authorities are under pressure. Opposition MLA S Suresh Kumar has vowed to raise the issue with the CM.

    Tax consultant Sreenivasan Ramakrishnan said Bengaluru could become a test case: “If this strategy nets good revenue, other states may follow. Chat vendors in Mumbai are already being watched.”

    The Bigger Picture

    While digital payments have boosted transparency, the sudden tax crackdown on informal vendors—many of whom are not formally registered—raises questions about how inclusive and fair India’s tax system is, especially for low-income, self-employed workers.