Amid rising concerns among small business owners in Bengaluru over GST enforcement, the Karnataka Commercial Tax Department has issued a crucial clarification, stating that GST notices are not based solely on Unified Payments Interface (UPI) transactions. The clarification comes after a visible shift among local traders from digital payments to cash, driven by fears of tax scrutiny linked to UPI.
In recent days, roadside vendors, food stalls, corner shops and unregistered market sellers across Bengaluru were seen displaying signs that read "No UPI, only cash," following reports that GST notices were being served based on UPI data. The vendors feared that accepting digital payments might lead to increased tax liabilities or scrutiny from authorities.
Responding to the growing anxiety, the Additional Commissioner of Commercial Taxes issued a public statement on Thursday, reassuring traders that GST applicability is determined by total income from all payment channels - including cash, card, bank transfers and digital platforms - not UPI alone.
"GST is applicable on the consideration received for supplies in any form. UPI is merely a method of receiving such consideration," the department clarified in a press release.
Authorities reiterated that any business crossing the annual turnover threshold of Rs 40 lakh for goods or Rs 20 lakh for services is required to register under the GST regime, regardless of the payment method used. Officials emphasized that avoiding UPI payments will not help businesses escape GST liability if their turnover exceeds the prescribed limits.
The department urged traders to continue accepting UPI and other digital payments, warning that deliberately switching to cash-only operations to avoid tax compliance may invite further scrutiny.
This clarification aims to reduce panic among small-scale businesses while reinforcing the need for compliance with GST norms, irrespective of the mode of transaction.
Also Read: UPI Data Leads to GST Crackdown: Karnataka Govt Issues Notices to 14,000 Traders
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