A GST notice to a small vegetable seller in Karnataka’s Haveri has triggered widespread protests among street vendors and small traders across the state. The notice, which demands ₹29 lakh in tax based on digital transactions over four years, has raised concerns about the treatment of informal businesses using UPI payments. A vegetable vendor from Haveri, Karnataka, recently received a ₹29 lakh GST notice over his income of Rs 40 lakh. The case has sparked a wider protest among small traders across the state who rely on UPI and other digital payments.
Karanataka Vegetable vendor shocked by ₹29 lakh tax demand
Shankargouda, who runs a small vegetable stall near the Municipal High School grounds in Haveri, said he was stunned to receive a notice from the commercial tax department. Officials claimed that his UPI-based transactions totalled ₹1.63 crore over four years, making him liable to pay ₹29 lakh in GST.
"... Since there are no GST rules on fruits and vegetables, I did not register for GST number. But I got a notice to pay Rs 29 lakh in taxes for a business of over Rs 40 lakh..." he said.
"I procure vegetables from the farmers and sell the produce at the small shop I own near Municipal High School grounds. Nowadays, customers favour UPI payments. They pay Rs 10-20 through phonepe, paytm. I promptly file I-T returns every year. I have records for the same. The GST officials have served a tax demand of Rs 29 lakh. How can I pay such a huge amount?" Shankargouda added.
Fresh vegetables not covered under GST
According to tax advisory platform ClearTax, fresh and chilled vegetables are not taxed under GST. Vendors selling unprocessed vegetables directly procured from farmers are generally exempt. However, increased use of UPI has led tax authorities to assess total turnover through digital payment data, affecting many unregistered vendors.
Street vendors raise alarm, demand relief
Several small vendors and local traders in Karnataka have reported receiving similar tax notices. They argue that such action is unjustified and unaffordable given their low margins. The Karnataka Pradesh Street Vendors Association has urged the state government to intervene.
"Small businesses run with a margin of 5 to 10 percent... The tax (GST) along with other things like penalty, comes to 50% and it is not possible for the vendors to pay such a huge tax with this. We request the government to interfere and give relaxation to the small vendors in this matter..." said Abhilash Shetty, a representative of the association.
Advocate Shakuntala, the association’s legal counsel, said the government failed to educate vendors at the time of registration.
"If taxes are being imposed, why were they not educated first?... When they took the registration, they should have been made aware about the taxes on selling of goods, revenue..." she said.
Tax payers vs Non-tax payers
Some taxpayers have questioned why small businessmen should be exempt when others are paying high taxes. They argue that if a salaried individual pays 30% income tax on ₹40 lakh earnings, small traders making similar amounts through UPI should also follow tax rules. They say the system should be fair for everyone, regardless of how the income is earned.
BJP blames government for targeting small traders
The issue has also taken a political turn, with the BJP accusing the Congress-led state government of misusing the GST system to target small businesses.
“Congress is destroying small businesses in Karnataka. In a recent mindless crackdown, Karnataka GST authorities have issued heavy-handed notices to small vendors under the pretext of GST evasion -- many running into lakhs of rupees. The data from UPI transactions is being weaponized to raise arbitrary tax demands. As a result, thousands of small traders in Bengaluru are now abandoning digital payments altogether. This is not just harassment -- it is economic sabotage. Under GST law, the burden of proof lies with the tax officer -- not the trader. Why then is the Congress government unleashing this coercion on those who form the backbone of our economy? This is nothing but a desperate attempt to fund their freebie culture. And yet, Rahul Gandhi has the audacity to claim he stands with small businesses,” BJP spokesperson Amit Malviya said on June 16.
Karnataka CM to meet affected vendors today
Chief Minister Siddaramaiah is scheduled to meet with small traders and vendors at his official residence, Cauvery, at 3 pm today. The meeting will include Ritesh Kumar Singh, Principal Secretary of the Finance Department, and Vipul Bansal, Commissioner of Commercial Taxes.
The outcome of the meeting may shape the state government’s next steps on the growing unrest among small vendors over digital payment scrutiny and retrospective tax demands.
Karanataka Vegetable vendor shocked by ₹29 lakh tax demand
Shankargouda, who runs a small vegetable stall near the Municipal High School grounds in Haveri, said he was stunned to receive a notice from the commercial tax department. Officials claimed that his UPI-based transactions totalled ₹1.63 crore over four years, making him liable to pay ₹29 lakh in GST.
"... Since there are no GST rules on fruits and vegetables, I did not register for GST number. But I got a notice to pay Rs 29 lakh in taxes for a business of over Rs 40 lakh..." he said.
#WATCH | A vegetable trader in Haveri, Shankar Gowda Hadimani has received a GST notice from the Bengaluru Tax Office to pay Rs 29 lakh in taxes
— ANI (@ANI) July 23, 2025
He says, "... Since there are no GST rules on fruits and vegetables, I did not register for GST number. But I got a notice to pay Rs… pic.twitter.com/E8WzymHl2s
"I procure vegetables from the farmers and sell the produce at the small shop I own near Municipal High School grounds. Nowadays, customers favour UPI payments. They pay Rs 10-20 through phonepe, paytm. I promptly file I-T returns every year. I have records for the same. The GST officials have served a tax demand of Rs 29 lakh. How can I pay such a huge amount?" Shankargouda added.
Fresh vegetables not covered under GST
According to tax advisory platform ClearTax, fresh and chilled vegetables are not taxed under GST. Vendors selling unprocessed vegetables directly procured from farmers are generally exempt. However, increased use of UPI has led tax authorities to assess total turnover through digital payment data, affecting many unregistered vendors.
Street vendors raise alarm, demand relief
Several small vendors and local traders in Karnataka have reported receiving similar tax notices. They argue that such action is unjustified and unaffordable given their low margins. The Karnataka Pradesh Street Vendors Association has urged the state government to intervene.
"Small businesses run with a margin of 5 to 10 percent... The tax (GST) along with other things like penalty, comes to 50% and it is not possible for the vendors to pay such a huge tax with this. We request the government to interfere and give relaxation to the small vendors in this matter..." said Abhilash Shetty, a representative of the association.
Advocate Shakuntala, the association’s legal counsel, said the government failed to educate vendors at the time of registration.
"If taxes are being imposed, why were they not educated first?... When they took the registration, they should have been made aware about the taxes on selling of goods, revenue..." she said.
Tax payers vs Non-tax payers
Some taxpayers have questioned why small businessmen should be exempt when others are paying high taxes. They argue that if a salaried individual pays 30% income tax on ₹40 lakh earnings, small traders making similar amounts through UPI should also follow tax rules. They say the system should be fair for everyone, regardless of how the income is earned.
BJP blames government for targeting small traders
The issue has also taken a political turn, with the BJP accusing the Congress-led state government of misusing the GST system to target small businesses.
“Congress is destroying small businesses in Karnataka. In a recent mindless crackdown, Karnataka GST authorities have issued heavy-handed notices to small vendors under the pretext of GST evasion -- many running into lakhs of rupees. The data from UPI transactions is being weaponized to raise arbitrary tax demands. As a result, thousands of small traders in Bengaluru are now abandoning digital payments altogether. This is not just harassment -- it is economic sabotage. Under GST law, the burden of proof lies with the tax officer -- not the trader. Why then is the Congress government unleashing this coercion on those who form the backbone of our economy? This is nothing but a desperate attempt to fund their freebie culture. And yet, Rahul Gandhi has the audacity to claim he stands with small businesses,” BJP spokesperson Amit Malviya said on June 16.
Karnataka CM to meet affected vendors today
Chief Minister Siddaramaiah is scheduled to meet with small traders and vendors at his official residence, Cauvery, at 3 pm today. The meeting will include Ritesh Kumar Singh, Principal Secretary of the Finance Department, and Vipul Bansal, Commissioner of Commercial Taxes.
The outcome of the meeting may shape the state government’s next steps on the growing unrest among small vendors over digital payment scrutiny and retrospective tax demands.
You may also like
Circuit Zandvoort chiefs issue statement as storm causes floods weeks before F1 Dutch GP
Jose Mourinho gives honest Viktor Gyokeres to Arsenal transfer verdict after £64m breakthrough
Teen girl dies in NHS hospital in 'advanced state of starvation' weighing just 32kg
Ozzy Osbourne's Black Sabbath pals feared for his health days before he died
Why does most fat get deposited around the stomach? Understand the whole thing from doctors
