The Union Finance Ministry has categorically denied reports that the Central GST authorities have issued notices to small traders and street vendors across the country, including Karnataka, based solely on their UPI transactions.
Responding to a starred question in the Lok Sabha, Finance Minister Nirmala Sitharaman stated that “no such notices have been issued without assessment of business activities”. The clarification comes amid growing concerns and media reports suggesting harassment of small businesses through tax demands linked to digital payments.
GST Evasion Data from Karnataka
While dismissing the allegation of unwarranted notices, the government released figures on GST evasion cases detected in Karnataka.
- 2022-23: 959 cases detected, involving ₹25,839 crore, with ₹1,705 crore recovered voluntarily; 2 arrests made.
- 2023-24: 925 cases, ₹7,202 crore detected, ₹1,197 crore recovered; 2 arrests.
- 2024-25: 1,254 cases, ₹39,577 crore detected, ₹1,623 crore recovered; 9 arrests.
The Finance Minister clarified that these evasion cases were not linked to systemic flaws within the GST framework.
Measures to Ease Compliance for Small Businesses
Highlighting efforts to reduce the compliance burden on small and medium enterprises (SMEs), Sitharaman noted several GST Council–recommended relaxations:
Exemption from GST registration for intra-state supply of goods up to ₹40 lakh turnover (₹20 lakh in special category states) and services up to ₹20 lakh turnover (₹10 lakh in special category states).
Composition levy scheme for businesses with turnover up to prescribed limits, with a reduced tax rate of 1% for traders/manufacturers and 5% for restaurants.
Quarterly return filing with monthly tax payment for entities with turnover up to ₹5 crore.
Optional filing of annual returns for FY 2017-18 to FY 2023-24 for businesses with turnover up to Rs. 2 crore.
The statement appears aimed at addressing both political and business community concerns over alleged overreach by tax authorities, especially in light of the rapid growth of digital transactions in India.
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Mariya is the Senior Editor at Juris Hour. She has 5+ years of experience on covering tax litigation stories from the Supreme Court, High Courts and various tribunals including CESTAT, ITAT, NCLAT, NCLT, etc. Mariya graduated from MLSU Law College, Udaipur (Raj.) with B.A.LL.B. and also holds an LL.M. She started as a freelance tax reporter in the leading online legal news companies like LiveLaw & Taxscan.
