Bengaluru: In a major step to curb tax evasion and enhance GST revenue, the government has begun leveraging Unified Payments Interface (UPI) data to track traders who are operating without GST registration. This initiative particularly targets those accepting digital payments via QR codes and has already led to the issuance of notices to nearly 14,000 traders.
Govt Targets Traders Evading GST Using UPI Transactions
According to the Commercial Taxes Department, these traders have exceeded the GST registration threshold but failed to comply with the mandatory registration norms. Under GST laws, businesses with annual turnover above ₹40 lakh for goods and ₹20 lakh for services must register under GST. Those with turnover under ₹1.5 crore can opt for the composition scheme, paying a flat 1% tax without input tax credit benefits.
Commercial Taxes Commissioner Vipul Bansal stated,
“This crackdown is not merely about revenue collection—it’s about creating a level playing field. Those who evade taxes should contribute just like the honest taxpayers.”
Currently, Karnataka has around 10.3 lakh GST-registered traders. The department expects to register at least another one lakh traders through this enforcement drive. This move is essential to achieve the state’s commercial tax collection target of ₹1.2 lakh crore for the current fiscal year. So far, collections stand at ₹26,241 crore—reflecting a 13% shortfall. Officials believe that bringing unregistered businesses into the tax net could add an estimated ₹10,000 crore in revenue.
Small Businesses Raise Concerns Over Tax Arrears
The intensified enforcement has raised concerns among small traders, including grocery store owners, bakers, and vegetable vendors. Many claim they’ve been served notices demanding backdated GST payments from 2021, with liabilities ranging between ₹40 lakh and ₹50 lakh—sums they say are financially overwhelming.
While trade bodies support the intent of the drive, they urge the government to approach the issue with sensitivity. Trade activist Sajjan Raj Mehta commented,
“The government’s initiative is commendable, but care must be taken to avoid undue harassment. Most of those flagged through UPI are small-scale traders.”
Some traders argue that UPI transactions don’t necessarily reflect business turnover, as personal transfers and payments are often mixed in. However, tax officials clarified that only those with over ₹40 lakh in UPI receipts were targeted, and actual business turnover could be even higher when cash and card payments are considered.
Fair Opportunity and Support Promised
BT Manohar, a member of the Karnataka State GST Advisory Council, stressed the importance of giving traders a chance to explain their position:
“This move has raised awareness among businesses about GST compliance. But if personal transactions are being misinterpreted as business income, traders should be allowed to clarify.”
Officials also clarified that hawkers and those selling exempt goods such as bread remain outside the GST scope. The focus is on traders dealing in taxable items, including those under the 5% GST slab like spices and condiments, as well as those in higher tax brackets.
Commissioner Bansal reassured the trading community, saying,
“Genuine cases will be given a fair hearing. The law permits payment of tax dues in instalments, and we are committed to providing every possible support to ease the burden.”
Key Takeaways:
- Govt using UPI data to identify unregistered traders above GST thresholds
- Notices served to over 14,000 traders; more expected to follow
- Estimated ₹10,000 crore in potential tax revenue from this move
- Small traders seek relief from backdated tax demands
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Govt assures support, fair hearing, and instalment options for genuine cases