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A small vendor selling vegetables from Haveri, Karnataka, has been taken aback by a large tax bill. Shankargouda Hadimani, who operates a little vegetable store next to the Municipal High School, has been instructed to pay Rs 29 lakh according to Goods and Services Tax (GST) regulations. He has been in the vegetable business for four years. Most of his clients prefer to pay using UPI or other digital payment methods. The issues began when GST authorities issued him a notice claiming he had transactions totaling Rs 1.63 crore over four years and now owes Rs 29 lakh in GST. Shankargouda explains that he purchases fresh produce straight from farmers and sells it in his modest shop. He mentions that many customers opt for UPI since they seldom carry cash nowadays.
He also stated that he files his income tax returns promptly every year and maintains accurate records. Now, he is concerned about how he can possibly come up with Rs 29 lakh, an amount he believes is unachievable. As per ClearTax, fresh and chilled vegetables are exempt from GST. If a seller purchases vegetables directly from farmers and sells them fresh and unprocessed, there is no GST charge. However, recently, the Karnataka GST authority indicated they are monitoring sellers who accept digital payments closely. On July 12, 2025, the department announced that sellers whose total earnings exceed the threshold for GST registration will receive notices if they fail to register and pay taxes. Following the notices, numerous small sellers like Shankargouda ceased accepting UPI payments, switching exclusively to cash.
In a statement released on July 17, 2025, the Karnataka GST authority noted that they are aware that vendors are avoiding UPI and transitioning to cash payments. Nevertheless, the department cautioned that tax obligations pertain to the total amount received, regardless of whether it is via UPI or cash. Officials stated that they would pursue recovery of taxes if sellers attempt to conceal their actual earnings, as per the report. Cases like Shankargouda’s showcase how the new GST checks and notices are leaving small sellers feeling anxious and perplexed. Many are feeling trapped, forced to make a choice between taking digital payments or dealing with hefty tax demands they cannot manage.
