The GST Council may soon deliberate on providing amnesty from interest and penalties to small vendors who received tax notices based on UPI transaction data, according to Kotraswamy M, Commissioner of Central Taxes.
Speaking at a grievance redressal and awareness seminar organized by Rotary Bangalore, JP Nagar, Kotraswamy said,
"If this issue is being flagged because there are so many taxpayers, the GST Council can take a call, giving amnesty to them from interest and penalty. So, there is a solution rather than making it a political issue."
Backdrop: Small Traders Raise Concerns Over GST Notices Based on UPI Data
The remarks follow Karnataka Chief Minister Siddaramaiah's assurance that only traders with turnovers above Rs 40 lakh for goods would be scrutinized and that old tax dues would not be enforced if such vendors register under GST going forward.
Kotraswamy acknowledged that many small business owners were confused and alarmed by the recent GST notices, particularly due to limited digital literacy.
"Maybe their digital education is not adequate… once they know what they are supposed to do, they will find nothing wrong with the notices," he said.
Also Read: GST Notices sent to 7000 Unregistered Vendors in Karnataka based on UPI Transaction Data
Digital Footprints Trigger GST Compliance Action
The commissioner emphasized that tax officials are using digital transaction trails, including UPI and bank transfers, to identify businesses exceeding registration thresholds.
"If somebody provided services with an annual turnover of more than Rs 20 lakh, or goods worth more than Rs 40 lakh, they are supposed to register themselves," Kotraswamy clarified.
Income Tax Department to Continue Identifying Non-Compliance
Echoing the focus on compliance, Amrita Ranjan, Principal Commissioner of Income Tax, Bengaluru, stated that the department would continue to flag potential violations using data analytics:
"When the code works, it will work on a threshold and we will identify the cases," she said.
GST Registration Thresholds: What the Law Says
- Rs 40 lakh annual turnover: Mandatory GST registration for supply of goods
- Rs 20 lakh annual turnover: Mandatory GST registration for supply of services
Despite concerns raised by small traders, the Finance Ministry recently clarified in the Rajya Sabha that there are no plans to levy GST on UPI transactions, even if they exceed Rs 2,000 - addressing public confusion triggered by tax notices tied to digital payment data.
Why This Matters
If the GST Council moves ahead with an amnesty scheme, it could offer significant relief to small businesses grappling with unexpected tax demands, and promote voluntary registration and compliance without penal consequences.
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