Bengaluru: Thousands of small traders across Karnataka, including bakery owners, tea vendors, and street-side shopkeepers, are planning a statewide bandh on July 25 to protest against GST demand notices issued by the state’s Commercial Tax Department. The notices target businesses with annual UPI turnovers above ₹40 lakh, sparking outrage among the trader community.
According to Ravi Shetty Byndoor of the Karnataka State Karmika Parishat, the association has given the state government until July 24 to revoke the notices. If no action is taken, the bandh will proceed as planned. As a symbolic protest, traders will halt the sale of milk-based products on July 23 and 24.
Shetty alleged that the tax department’s actions are unjustified and overly aggressive, claiming that businesses have been threatened with bank account seizures and shop closures unless dues are paid by July 21. “Thousands of traders have received show-cause notices with tax demands running into lakhs, even crores,” he said.
In response, many traders have reportedly removed UPI QR code stickers from their establishments, fearing legal repercussions. The protest is expected to culminate in a mass gathering at Freedom Park in Bengaluru on July 25, with shopkeepers and their families participating.
Vipul Bansal, Karnataka’s Commissioner of Commercial Taxes, clarified that the notices are based on verified UPI transaction data from FY 2021–22 to FY 2024–25, covering around 14,000 merchants. He emphasized that only notices have been issued so far, not penalties, and encouraged traders to clarify their registration status.
“Those selling exempt goods or under the composition scheme face minimal tax implications,” Bansal said. He stressed that over one lakh small dealers in Karnataka already operate under the 1% composition scheme, and compliance should not be optional.
As of May 2025, Karnataka ranks second in India for UPI usage, contributing 7.73% of all UPI transactions nationwide, just behind Maharashtra. The ongoing crackdown has intensified concerns among small business owners who now fear punitive taxation due to digital payment transparency.
