Bengaluru Street Vendors Demand Clarity on Tax Impositions

Small-scale traders and merchants in Karnataka are voicing serious concerns over recent GST notifications from commercial tax authorities. These notifications target UPI transactions exceeding ₹40 lakh annually, prompting many vendors in Bengaluru to reject digital payments in favor of cash. The situation has escalated, with vendors like Shankar Gowda Hadimani receiving hefty tax notices that have left them anxious about their financial futures. The Karnataka Pradesh Street Vendors Association is calling for leniency and better communication from authorities regarding tax obligations.

Concerns Over GST Notifications

The recent issuance of GST notifications has alarmed small-scale traders in Karnataka, particularly those operating in Bengaluru. The notifications pertain to UPI transactions that exceed ₹40 lakh in a financial year. Many vendors, who previously relied on digital payments, are now opting for cash transactions to avoid potential tax liabilities. This shift has raised concerns about the future of digital payment systems among small businesses.

Shankar Gowda Hadimani, a vegetable vendor from Haveri, expressed his distress after receiving a tax notice demanding ₹29 lakh. He explained that he had not registered for GST because there are no specific rules governing the sale of fruits and vegetables. Hadimani’s case highlights the confusion and fear among vendors who feel unprepared for such financial burdens.

Appeals for Leniency

In light of the overwhelming tax demands, the Karnataka Pradesh Street Vendors Association has formally appealed to the government for leniency. Abhilash Shetty, a representative of the association, emphasized that small businesses typically operate on narrow profit margins of 5 to 10 percent. He pointed out that the cumulative tax burden, including penalties, can reach up to 50%, making it nearly impossible for vendors to comply.

Shetty’s call for government intervention reflects a growing sentiment among small traders who feel that the current tax regime is unsustainable. The association is urging authorities to reconsider their approach and provide relief to small vendors who are struggling to navigate the complexities of GST compliance.

Criticism of Tax Enforcement

The issuance of GST notices has not only sparked concern among vendors but has also drawn criticism from political figures. BJP spokesperson Amit Malviya condemned the actions of Karnataka’s GST authorities, accusing them of targeting small businesses under the guise of tax enforcement. He described the situation as “economic sabotage,” claiming that the data from UPI transactions is being misused to impose arbitrary tax demands.

Malviya’s comments reflect a broader frustration with the government’s handling of small business taxation. He argued that the burden of proof should lie with tax officers, not the vendors, and questioned the rationale behind the aggressive enforcement of tax regulations. This criticism underscores the tension between small traders and government authorities, as many feel that their livelihoods are at stake.

Need for Better Communication

Legal experts have also weighed in on the situation, highlighting the need for better communication between tax authorities and small vendors. Advocate Shakuntala, representing the Karnataka Pradesh Street Vendors Association, criticized the lack of education provided to vendors regarding their tax obligations. She argued that if taxes are being imposed, vendors should have been informed about their responsibilities during the registration process.

Shakuntala’s remarks point to a significant gap in understanding between small traders and tax authorities. Many vendors are unaware of the implications of their business activities, leading to confusion and fear when faced with tax notices. Improved communication and education could help alleviate some of the anxiety surrounding GST compliance and foster a more supportive environment for small businesses in Karnataka.

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