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By legislation, anybody promoting items and making over Rs 40 lakh per 12 months (Rs 20 lakh for providers) should join GST. In the event that they haven’t, tax officers may ship them a discover—which has already occurred to about 14,000 merchants in Karnataka who had over Rs 40 lakh in UPI receipts between 2021 and 2025. For now, the discover solely asks them to register and clarify their earnings, to not pay tax instantly.
In Karnataka, this has upset many small merchants—like bakery, chai, and condiment store house owners—who say the notices are unfair, particularly since a few of their UPI funds could be private cash, not enterprise gross sales. They’ve threatened a statewide shutdown to protest these calls for, and commerce teams are actually in talks with tax officers and UPI apps to kind issues out.
This enforcement is pushing some small retailers to start out preferring money once more, simply to keep away from drawing consideration or new hassles. However GST officers say this crackdown is about equity: everybody making large cash ought to observe the identical guidelines as companies already registered for tax.
UPI funds are vastly common—over 18 billion transactions each month, and practically two-thirds of UPI funds are literally for purchasing at shops. Retailers like UPI as a result of there’s no additional price (not like card funds), so it’s cheaper for them.
Lastly, there’s no GST on UPI transactions themselves—solely on the enterprise’s turnover in the event that they cross the Rs 40 lakh mark. The federal government says gross sales of issues like bread are exempt, however packed snacks and different taxable objects aren’t. Merchants can reply to notices by exhibiting data or clarifying if any UPI cash was for non-business causes, and tax officers are supposed to assist information them via the method.
