The Goods and Services Tax (GST) Council could consider a relief package, including amnesty from interest and penalties, for small vendors who have received tax notices based on their UPI transaction data, according to Kotraswamy M, Commissioner of Central Taxes.
Speaking at an awareness and grievance redressal seminar hosted by Rotary Bangalore (JP Nagar), Kotraswamy noted that if concerns over mass issuance of notices are widespread, the GST Council has the authority to intervene. “If this issue is being flagged because there are so many taxpayers, the GST Council can take a call, giving amnesty to them from interest and penalty. So, there is a solution rather than making it a political issue,” he stated.
The remarks follow Karnataka Chief Minister Siddaramaiah’s assurance that only businesses crossing the prescribed turnover thresholds—Rs 40 lakh for goods and Rs 20 lakh for services—will be scrutinised. The CM also assured that earlier dues may be waived for those who register for GST going forward.
Kotraswamy acknowledged the anxiety among small traders receiving these notices, attributing it largely to gaps in digital literacy. “Maybe their digital education is not adequate; they are not aware and feel that something bad has happened,” he said. He added that once small vendors understand the requirements, they will realise the legitimacy of the notices.
He clarified that tax obligations are triggered when business transactions cross certain thresholds, whether recorded through UPI, bank transfers, or other digital methods. “If somebody provided services with an annual turnover of more than Rs 20 lakh, or goods worth more than Rs 40 lakh, they are supposed to register themselves,” he explained.
Reinforcing the Centre’s stand, Amrita Ranjan, Principal Commissioner of Income Tax (Bengaluru), said the department will continue to flag tax evasion cases based on digital data analytics. “When the code works, it will work on a threshold and we will identify the cases,” she noted.
What the Rules Say
- Businesses supplying goods must register for GST if their annual turnover exceeds Rs 40 lakh.
- For services, the threshold is Rs 20 lakh per annum.
- The Finance Ministry has clarified that GST is not being levied on UPI transactions above Rs 2,000, countering speculation that arose from recent tax notices issued based on UPI transaction data.
The evolving situation has triggered debate among traders and tax professionals alike, especially as UPI adoption has skyrocketed among small and micro-enterprises. With the GST Council expected to meet in the coming months, the possibility of an amnesty scheme is likely to be a key discussion point.
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