A team of The Goods and Services Tax (GST) officials sent a notice to Shankaragouda, a vegetable vendor from Haveri, Karnataka, claiming that he had made transactions worth Rs 1.63 crore in the last four years. He has been selling vegetables for the past four years and like many of his colleagues in the business, he accepts payments through UPI or other digital wallets from customers. However, this has turned out to be a big problem for him. Shankaragouda was shocked when he received the notice and said, "How do we pay 29 lakh rupees? It is impossible. "According to the GST officials, the transaction is of Rs 1.63 crore, and as per this, GST liability is Rs 29 lakh.
According to an India Today report, Shankargowda said that he buys fresh vegetables directly from the farmers and sells them in his small shop. Most customers prefer UPI payment because financial transactions are usually online in these days. He said that every year he and his family file their income tax returns (ITR) and also keep a complete record of them.
According to the rules, if a seller buys vegetables directly from the farmers and sells them without processing, then GST will not be levied on such fresh and cold vegetables. On the other hand, if the vegetables are branded or packed, then 5% GST is applicable on them.
However, after the case of Shankaregowda in Karnataka, many small traders like him have stopped accepting UPI payments and are now accepting cash.
An X (Formerly Twitter) account reported, "Karnataka small vendors are dumping UPI payments and turning back to cash transactions due to GST bills. In some cases, GST bills amounting to lakhs of rupees."
According to a report, the Karnataka GST department clarified that they are keeping a close watch on merchants accepting digital payments. On July 12, it was declared that traders whose total turnover exceeds the GST registered limit will be sent a notice.
At the same time, when small traders started selling in cash, on July 17, the Karnataka GST department observed that traders were avoiding UPI and accepting cash transactions. They declared that tax will be applicable on the total amount received by them, whether it is through UPI or in cash.
