Bengaluru, once celebrated as India’s technology hub, is witnessing a surprising shift from digital payments back to physical cash. Across the city, QR codes are being replaced with stickers, printouts, or handwritten notes stating, “No UPI, only cash,” according to an Economic Times report by KR Balasubramanyam.
Small vendors who earlier preferred UPI payments are now requesting customers to pay in cash, citing increasing pressure from tax authorities. “I earn around ₹3,000 a day and survive on the small margin I make. I can no longer accept payments through UPI,” said Shankar, a shopkeeper from Horamavu, as quoted by the financial daily.
Vendors, along with lawyers and accountants, claim that thousands of unregistered
small businesses—including street food stalls, pushcart vendors, and neighbourhood shops—have received GST notices. In some cases, the tax demands reportedly run into several lakhs of rupees.
Advocate Vinay K. Sreenivasa, joint secretary of the Federation of Bengaluru Street Vendors Associations, said that many vendors fear harassment by GST officials and possible eviction by civic authorities. This fear, he explained, has pushed them to revert to cash transactions.
Under the existing GST rules, businesses selling goods must register and pay GST if their annual turnover exceeds ₹40 lakh, while service providers are required to do so once their turnover crosses ₹20 lakh.
The Commercial Taxes Department clarified that notices were issued only to entities whose UPI transaction data from 2021–22 onwards showed turnover levels that mandate GST registration. According to the department, such businesses are required to register under GST, declare their taxable turnover, and pay the applicable tax.
However, HD Arun Kumar, former Additional Commissioner of Commercial Taxes in Karnataka, argued that GST authorities cannot rely on arbitrary figures to determine turnover. He stated that under GST law, the burden of proof lies with tax officers, who must substantiate their claims before raising a tax demand—unlike in cases related to money laundering. His remarks were reported by ET’s KR Balasubramanyam.
Meanwhile, BJP MLA S. Suresh Kumar said he intends to write to Chief Minister Siddaramaiah, seeking his intervention in the matter.
A former GST field official noted that not all UPI credits should be treated as business income. “Some transactions may represent informal loans or transfers from family and friends,” he explained.
Bengaluru could become a test case for stricter enforcement. Chartered accountant Sreenivasan Ramakrishnan of Sreeni & Associates said that if GST authorities are able to collect significant revenue by bringing unregistered vendors into the tax net, other states are likely to follow suit, as most are under severe financial pressure.
He added that officials have already identified chat vendors in Mumbai with high business volumes, and it is only a matter of time before action expands further, given the vast potential tax base.
At the same time, Karnataka’s tax department is under mounting pressure to achieve a steep revenue goal of ₹1.20 lakh crore for the financial year 2025–26. The state government, led by Chief Minister Siddaramaiah, is finding it increasingly challenging to strike a balance between competing priorities. On one hand, it must secure adequate funds to sustain its ambitious welfare guarantee schemes, which together require an estimated outlay of around ₹52,000 crore. On the other, it is also facing growing demands from Congress MLAs, who are pushing for higher allocations toward infrastructure development and public works across their constituencies.
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