Bengaluru: In a startling development, small shop owners across Karnataka have been served commercial tax notices amounting to lakhs of rupees for receiving payments via digital platforms such as Google Pay and PhonePe.
Many owners of tea stalls, juice centers, bakeries, and condiment shops, who accepted payments through UPI from customers, have received notices from the Commercial Tax Department stating they owe GST dues dating back to 2021. In several instances, notices demand payments as high as ₹54 lakh, ₹46 lakh, and ₹32 lakh.
Speaking to reporters, affected traders expressed shock and confusion. “We run small businesses with daily sales of just ₹10,000 to ₹15,000, most of it through UPI,” said a bakery owner. “Now we are told to pay ₹39 lakh in GST, which we never anticipated. No prior notice or awareness campaign was made by the authorities or payment platforms,” he added.
In one instance, a juice shop owner shared that a GST notice for ₹41.4 lakh was served for transactions made via Google Pay and PhonePe, without any prior intimation. “Even for ₹1 matchbox, customers scan and pay digitally. Now we are told all these transactions count as commercial revenue, and we must pay taxes on them,” said another trader.
The traders claim that despite following the government’s push for Digital India and going cashless, they were unaware that UPI receipts could attract such high commercial taxes. Many of them said they had no formal business registration or GST understanding, and the sudden enforcement has put their livelihoods at risk.
The Bengaluru Live Correspondent confirmed that thousands of such notices have been issued over the past 10 days across Karnataka. “These notices mention UPI transaction totals from the past few years and demand immediate tax payments, with warnings of penalties for delay,” he said.
Many small business owners are now questioning the lack of clarity and guidance from digital payment companies and the government. “We embraced digital payments as part of national progress. But now we feel betrayed,” said a tea shop operator.
The affected traders are now demanding that the government and GST department provide clarification, waive penalties, and initiate awareness campaigns before penalizing small businesses.
