A chartered accountant has warned small businesses against accepting high-value online payments without GST registration, citing a growing trend of notices and penalties from tax authorities. “If the amount exceeds Rs 20/40 lakhs and you don’t have GST number, you may face GST and penalties,” CA Chirag Chauhan said on Wednesday.
Chauhan flagged the issue on social media amid rising reports of GST enforcement against unregistered vendors. “Small businesses should be cautious with online receipts via UPI, Gpay, BHIM, PayTm, etc. GST authorities are issuing non-compliance notices to small businesses,” he posted, pointing to growing regulatory scrutiny.
His warning comes as many vendors in Bengaluru have begun moving away from digital payments altogether. At several neighbourhood stores, QR code stickers are being taken down and replaced with notes reading “No UPI, only cash,” according to a report by The Economic Times.
The shift is being driven by fears of tax notices. Thousands of small businesses — including shopkeepers, food cart operators, and push-cart vendors — have received GST notices, some with demands running into lakhs of rupees, said lawyers and accountants familiar with the issue.
A vendor from Horamavu told ET, “I do a business of about Rs 3,000 a day and live on the small profit I make. I can’t accept payment by UPI anymore.”
Under the GST Act, businesses supplying goods must register and pay GST if their annual turnover crosses Rs 40 lakh. For service providers, the threshold is Rs 20 lakh. Karnataka’s commercial taxes department confirmed it has issued notices based on UPI transaction data since 2021–22 for cases where turnover appears to cross these limits.
The department reportedly said that in all such cases, the businesses must register for GST, disclose their taxable turnover, and pay the appropriate taxes.
There is also growing political pushback. BJP MLA S Suresh Kumar said he would write to Chief Minister Siddaramaiah seeking intervention. Vendors’ associations say the enforcement drive is creating fear, with many vendors preferring cash to avoid harassment and eviction threats.
Advocate Vinay K Sreenivasa, joint secretary of the Federation of Bengaluru Street Vendors Associations, said the trend is worrying and affects the digital economy narrative.
