Bengaluru: In a strong warning to potential tax evaders, the Commercial Taxes Department has cautioned traders who have shifted from UPI to cash transactions in an attempt to avoid Goods and Services Tax (GST). Officials clarified that GST is applicable on the value of the supply itself, regardless of the payment method.
“UPI is merely a mode of receiving payment. GST applies to the transaction value, whether the payment is made in cash or otherwise,” the department stated, confirming that action will be initiated against those attempting to bypass the law.
The clarification, issued through an official press note, comes amid confusion in the trade community following unverified reports suggesting GST applicability based solely on digital transactions. The department clarified that under Section 22 of the GST Act, 2017, registration is mandatory for businesses with annual turnover exceeding ₹40 lakh (for goods) or ₹20 lakh (for services), irrespective of the payment method — be it UPI, cash, POS, or bank transfers.
Businesses registered under the regular GST scheme are eligible for input tax credit and liable to pay tax only on taxable goods and services, thereby reducing the effective tax burden. Those with a turnover below ₹1.5 crore may opt for the composition scheme and pay GST at 1% (0.5% CGST + 0.5% SGST), but only after registration.
Officials have been directed to assist traders, verify documents, and help them comply with GST provisions without inconvenience. Guidance camps and help desks are being facilitated across the state.
The department noted that 98,915 traders are already registered under the composition scheme, and less than 10% have received compliance notices. The majority are paying tax as required by law.
