Bengaluru Vendors Ditch UPI, Return to Cash
In Bengaluru, several small traders, food vendors, and street shopkeepers have stopped accepting UPI payments and switched back to cash-only transactions. The shift follows a wave of GST notices sent to unregistered vendors whose UPI transactions crossed prescribed turnover thresholds. Many vendors fear that digital payment records are being used by tax authorities to issue penalty notices or enforce registration, which they say could lead to undue harassment and even civic eviction from public spaces.
Traders Express Concern Over Tax Notices
Vendors say they began receiving notices demanding lakhs in unpaid GST based on their UPI transaction history, even if those receipts included personal payments or non-taxable income. A vendor selling fruits in East Bengaluru said he had removed his QR code after receiving a legal notice for crossing ₹20 lakh in annual receipts through UPI. He argued that his actual business turnover is far lower, but the system counts everything without differentiation.
Authorities Target High-Value Digital Transactions
The Karnataka Commercial Taxes Department confirmed it used digital payment data to identify nearly 14,000 unregistered businesses across the state. As per GST law, businesses dealing in goods with turnover above ₹40 lakh or services exceeding ₹20 lakh are liable to register under GST or opt for a composition scheme. However, traders argue that the department is not considering the complexity of informal economies where personal and business payments often mix.
Associations Seek Relief and Clarity
Local trader associations have appealed to the state government to issue clear guidelines and protect small vendors from blanket enforcement. They want reassurances that genuine small businesses won’t be penalised or evicted based solely on UPI data. Many of them have now put up signs saying “Cash Only” or “No UPI” in a symbolic pushback against what they call coercive compliance.
Risk to Digital Economy Targets
The reversal to cash has triggered concerns among digital payment advocates who warn that such enforcement may discourage small traders from using formal banking channels. India’s push for a cashless economy, largely successful post-demonetisation and during COVID-19, could face a major roadblock if grassroots-level vendors pull back from UPI adoption. Policymakers now face the task of finding a balance between increasing GST coverage and ensuring ease of doing business for the informal sector.
