A chartered accountant has warned small companies in opposition to accepting high-value on-line funds with out GST registration, citing a rising pattern of notices and penalties from tax authorities. “If the quantity exceeds Rs 20/40 lakhs and you do not have GST quantity, it’s possible you’ll face GST and penalties,” CA Chirag Chauhan mentioned on Wednesday.
Chauhan flagged the difficulty on social media amid rising reviews of GST enforcement in opposition to unregistered distributors. “Small companies ought to be cautious with on-line receipts by way of UPI, Gpay, BHIM, PayTm, and so on. GST authorities are issuing non-compliance notices to small companies,” he posted, pointing to rising regulatory scrutiny.
His warning comes as many distributors in Bengaluru have begun transferring away from digital funds altogether. At a number of neighbourhood shops, QR code stickers are being taken down and changed with notes studying “No UPI, solely money,” in response to a report by The Financial Instances.
The shift is being pushed by fears of tax notices. 1000’s of small companies — together with shopkeepers, meals cart operators, and push-cart distributors — have obtained GST notices, some with calls for working into lakhs of rupees, mentioned legal professionals and accountants aware of the difficulty.
A vendor from Horamavu instructed ET, “I do a enterprise of about Rs 3,000 a day and dwell on the small revenue I make. I can not settle for cost by UPI anymore.”
Underneath the GST Act, companies supplying items should register and pay GST if their annual turnover crosses Rs 40 lakh. For service suppliers, the brink is Rs 20 lakh. Karnataka’s business taxes division confirmed it has issued notices based mostly on UPI transaction knowledge since 2021–22 for instances the place turnover seems to cross these limits.
The division reportedly mentioned that in all such instances, the companies should register for GST, disclose their taxable turnover, and pay the suitable taxes.
There may be additionally rising political pushback. BJP MLA S Suresh Kumar mentioned he would write to Chief Minister Siddaramaiah in search of intervention. Distributors’ associations say the enforcement drive is creating worry, with many distributors preferring money to keep away from harassment and eviction threats.
Advocate Vinay Ok Sreenivasa, joint secretary of the Federation of Bengaluru Avenue Distributors Associations, mentioned the pattern is worrying and impacts the digital financial system narrative.
