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The GST Council could consider granting amnesty from interest and penalties to small vendors who have been issued tax notices based on UPI transaction data, according to Kotraswamy M, commissioner of central taxes.
Karnataka Chief Minister Siddaramaiah on Wednesday, July 23, clarified the Goods and Services Tax (GST) notices to small and micro traders, saying the state government would not pursue tax notices issued to traders for arrears on exempted goods and services over the past three years.
Chief Minister Siddaramaiah will meet with trade bodies along with finance department secretaries and commercial tax officers to allay the fears of small traders and street vendors on complying with GST norms on Wednesday.
Amid rising concerns among traders in Karnataka over the issuance of nearly 6,000 GST demand notices based on UPI transaction data, a top tax official has termed the action as within the framework of law. Traders’ bodies have gave a strike call over the matter.
With anxiety spreading among small and unregistered traders over tax notices linked to UPI payments, the Karnataka government has launched a statewide awareness initiative titled ‘Know GST’.
The commercial taxes department on Monday clarified that shop owners who have received notices so far could counter the department’s notice and request for verification.
An unregistered vegetable vendor from the town has received a notice for the non-compliance of new the Goods and Services Tax (GST) laws and a tax demand of Rs 29 lakhs.
Chief Minister Siddaramaiah on Sunday said the State government will take up with the Centre the issue of small traders getting GST notices from the Commercial Taxes Department for transactions through UPI. He also made it clear that the issue would be discussed with the State Commercial Taxes Department before making a decision in this regard.
The department has issued a press note dated 11-07-2025 regarding the traders who have done business through the digital payment gateways. Subsequently, various reports have been published in various electronic and press media on this issue and it is learnt that this has caused confusion amongst the trade community.
Small traders across Karnataka – including condiments, bakeries, tea and coffee shops – have threatened a statewide shutdown on July 25 in protest against the GST demand notices issued by the Commercial Tax Department.