The Karnataka Commercial Tax Department’s recent clampdown on Goods and Services Tax (GST) evasion has unsettled traders across the state.
Officials have begun issuing demand notices to shopkeepers and small businesses with annual UPI transaction volumes exceeding ₹40 lakh. The enforcement has led some traders in Bengaluru to remove UPI QR codes from their shops, fearing tax scrutiny and compliance hassles.
Commissioner of Commercial Taxes Vipul Bansal said about 14,000 cases of suspected evasion have been flagged so far, based on data gathered from UPI service providers. “Notices are being sent to those with UPI receipts over ₹40 lakh,” Bansal confirmed, while clarifying that no penalties have been imposed yet and there is no cause for panic.
The move has sparked anxiety among small merchants who rely on digital payments for daily transactions. While UPI has become the preferred payment method for countless consumers, some shopkeepers have begun encouraging cash instead to avoid complications.
Bansal noted that the rise of UPI was consumer-driven: “If one trader refuses UPI, another will accept it—because the demand comes from customers.”
Shopkeeper Sudhakar Sheenappa Shetty, who received a notice, said he and other business owners plan to approach the government for clarity. “Customers want UPI. We’ll find a way to address this,” he added.
Public reaction has been mixed, with some supporting tighter tax compliance and others concerned about the impact on consumers and small businesses.