Small businesses and street vendors in Bengaluru are abandoning digital payments and reverting to cash transactions.
The move comes after a recent GST compliance crackdown by the Commercial Taxes Department.
Earlier, authorities issued directives mandating GST registration for businesses with annual turnovers exceeding Rs 40 lakh (for goods) or Rs 20 lakh (for services).
After notices, Bengaluru vendors abandon UPI payments
The tax department has collected UPI transaction data from 2021 to 2025 to identify businesses that crossed the GST threshold without registering.
Notices are now being sent to these merchants. The step has forced many to hide or remove their QR codes to avoid scrutiny.
Vendors fear that complying with GST could erase their already slim profit margins.
Authorities have found nearly 65,000 merchants in Karnataka who received substantial UPI payments without GST registration.
Some Bengaluru vendors were found using multiple UPI IDs under the names of the family members to split transactions and evade detection.
Cash makes a comeback
Despite government assurances that vendors can claim tax returns with proper documentation, many remain skeptical.
Some vendors are considering cash-only transactions due to the confusion over taxes.
As the GST enforcement intensifies, the city’s bustling informal economy finds itself at a crossroads.
