Karnataka commercial tax dept targets traders evading GST despite over Rs 40 lakh UPI annual earnings

Karnataka Commercial Tax Department on July 11 said it has issued notices to traders who have evaded GST despite earning over Rs 40 lakh annually through UPI payments.

This development comes after several establishments, including shops in Bengaluru, reported receiving notices from the department.

"The Commercial Tax Department has obtained data from UPI service providers on payments received by traders via UPI between financial years 2021–22 and 2024–25. Since traders receive payments through cash, UPI, and other digital modes, their actual turnover is often significantly higher," said an official.

Based on this data, the department has issued notices to traders whose UPI receipts exceed Rs 40 lakh and who have neither registered for GST nor paid the applicable tax. “These traders have been asked to furnish details of the goods and services sold and to pay the correct amount of tax,” said an official.

The Goods and Services Tax (GST) Act came into effect nationwide on July 1, 2017. Under Section 22 of the Act, GST registration is mandatory if a supplier’s aggregate annual turnover exceeds Rs 40 lakh for goods or Rs 20 lakh for services.

This aggregate includes both taxable and exempt goods and services. However, tax liability arises only on taxable items - for instance, bread is tax-exempt, while snacks are taxed at 5 percent.

“Such traders must register for GST immediately. Small traders with an annual turnover of up to Rs 1.5 crore can opt for the Composition Scheme and pay a simplified tax at the rate of 1 percent,” the department said in a release. For further details, visit gst.kar.nic.in