New Delhi, July 22, 2025 – A small vegetable seller in Haveri, Karnataka, got a big surprise from tax officials. Shankargouda Hadimani received a GST notice demanding ₹29 lakh. This came after his UPI transactions added up to ₹1.63 crore over four years. He runs a simple stall near the Municipal High School grounds, buying fresh veggies from farmers and selling them right away. Fresh vegetables are exempt from GST, but the notice still came because of the high digital payment total.
Shankargouda started accepting UPI since most customers don’t carry cash anymore. He files income tax returns each year and keeps records. But GST rules say if your yearly turnover tops ₹40 lakh for goods, you must register. Officials checked UPI data from providers and sent notices to those over that limit. They figure the full turnover, including cash, is even higher.
Now, he’s stopped taking UPI to avoid more trouble. “How can I pay such a huge amount?” he asked. The notice left him worried about his small business.
Others Facing the Same Issue
This isn’t just his problem. Many small traders in Karnataka got similar GST notices based on UPI records. Bakers, flower sellers, and meat shops are on the list too. Some have put up signs saying “No UPI, only cash” to dodge scrutiny. Street vendors in Bengaluru even plan a three-day protest starting July 23, skipping milk sales and wearing black badges.
The tax department says switching to cash won’t help. GST applies to all payments if turnover crosses the limit. They warn of action against anyone hiding income. Notices go out to ensure registration and proper tax payment, even if some goods are exempt.
This push comes from gathering UPI data for 2021-25. Small traders with under ₹1.5 crore turnover can opt for a 1% tax scheme. But many feel harassed and worry it hurts the cashless economy drive.
Officials say it’s about following rules, not targeting the little guys. More traders might face this as checks continue across states.
