UPI Transactions/digital payments land small vendor in regulatory trouble

A small-time vegetable vendor, Shankargouda Hadimani in Haveri has found himself at the center of a tax controversy after receiving a Rs. 29 lakh demand notice from Goods and Services Tax (GST) authorities for non-compliance with GST regulations.

Shankargouda Hadimani, who has been running a modest vegetable shop near the Municipal High School grounds for the past four years, was issued the notice for conducting business without GST registration. Officials claim that Hadimani’s transactions through UPI and e-wallets over the years amounted to Rs. 1.63 crore—well above the threshold for mandatory GST registration.

The notice issued to Hadimani read: “You have done transactions worth Rs. 1.63 crore in the last four years, for which you have to pay GST of Rs. 29 lakh.” Following the notice, the vendor reportedly stopped accepting payments via UPI and other digital platforms.

Defending his position, Hadimani said, “I buy vegetables from local farmers and sell them at my small roadside shop. Customers prefer UPI nowadays, so I accepted those payments. I also file income tax returns regularly and maintain records. I don’t understand how I can be asked to pay such a huge amount.”

This incident highlights the increasing scrutiny on digital transactions by small businesses, even those operating at the grassroots level, and raises concerns over tax compliance awareness in informal sectors.