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Small Bengaluru business owners launch 3-day protest over GST notices on UPI transactions

Small traders across Bengaluru have launched a three-day protest from July 23, opposing GST notices linked to UPI transactions. The agitation, backed by milk vendors, bakery owners and auto drivers, follows tax demands served to over 14,000 traders, with some fearing arrears as high as Rs 40 lakh despite low actual turnover.

Small business owners in Bengaluru are staging a three-day protest against GST notices linked to UPI transactions.
Small business owners in Bengaluru are staging a three-day protest against GST notices linked to UPI transactions. Credit:Pixabay
| Updated on: Jul 23, 2025 | 02:42 PM
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Bengaluru: Small business owners across the Indian tech city have announced a three-day protest starting 23 July, in a growing backlash against recent GST notices tied to UPI transactions. The movement, driven largely by milk vendors, bakery operators and other micro-entrepreneurs, is set to cause widespread disruption to the city’s dairy trade for two days, culminating in a large-scale demonstration at Freedom Park on July 15. Support for the protest has also come from auto-rickshaw and cab drivers, who fear similar scrutiny. 

Tensions have escalated following tax notices served to more than 14,000 traders across Karnataka. Authorities allege that digital payment data suggests several businesses crossed the mandatory GST registration thresholds, Rs 40 lakh in annual turnover for goods, and Rs 20 lakh for services. In some instances, vendors have reportedly been asked to pay arrears nearing Rs 40 lakh, sparking panic among small operators and prompting many to temporarily suspend digital transactions.
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Know GST': Karnataka government launches state-wide initiative

In an attempt to quell growing anxiety, the Karnataka government has launched a state-wide initiative, ‘Know GST’, aimed at clarifying tax rules and correcting misinformation. The first of several planned workshops was recently conducted in Koramangala, and a helpline has been set up to guide traders through the compliance process.

Despite these efforts, mistrust continues to simmer. Trader associations argue that the GST notices misinterpret UPI payment volumes, which they claim often include non-commercial transfers such as personal or family transactions. Some vendors say they received notices even though their actual business turnover remains below the taxable limit, accusing tax authorities of overreach and undue pressure.

Issued notices are preliminary queries: Officials

The Federation of Karnataka Chambers of Commerce and Industry (FKCCI) has thrown its weight behind the strike, criticising tax authorities for acting without offering sufficient prior education or clarity. During a recent meeting involving nearly 70 traders, officials emphasised that the notices issued were only preliminary queries, not formal tax demands. Nevertheless, many attendees voiced frustration over the lack of transparency particularly around the interpretation of transactions dating back to 2021–22.

Chief Minister Siddaramaiah, who also holds the Finance portfolio, has assured business owners that he will raise the issue with the Union government at the forthcoming GST Council meeting. Meanwhile, the state’s Commissioner of Commercial Taxes has rejected allegations of intimidation, insisting that traders are simply being asked to provide supporting documents and that no tax amounts have yet been determined.

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