Relief for small vendors: Siddaramaiah backs down on UPI tax notices, traders end strike

Karnataka Chief Minister Siddaramaiah has announced that the state government will not pursue tax notices issued for the last three years on exempted goods and services, prompting traders to withdraw their planned July 25 strike, news agency PTI reported on Wednesday.

The decision comes in response to widespread protests triggered by tax notices based on Unified Payment Interface (UPI) transactions, with traders in Bengaluru and across the state threatening a boycott of digital payments. According to the Commercial Taxes Department, around 6,000 such notices had been issued statewide.

"Old tax arrears will not be pursued, provided all such traders register under GST and begin paying taxes moving forward," Siddaramaiah said after meeting with trade representatives. He stressed that businesses exclusively dealing in exempted goods such as milk, bread, fruits, vegetables, and tender coconut will not be required to register or face tax recovery.

The chief minister clarified that the disputed notices-many tied to UPI data, personal transactions, or loans-targeted only those with digital transactions exceeding Rs 40 lakh. "I told traders not to go on strike or stage a demonstration at Freedom Park. They have agreed to withdraw their agitation," he said.

Trade bodies, including the Federation of Karnataka Chambers of Commerce and Industry (FKCCI), expressed concern over confusion among small traders regarding GST compliance. Siddaramaiah assured them of the government's support and announced the strengthening of a dedicated helpline to resolve grievances.

While reaffirming Karnataka's position as the second-highest GST contributor in the country, Siddaramaiah underscored the importance of expanding the tax base. "Traders must register. Registration is mandatory because everyone needs to be brought within the tax net," he said, while also pledging to protect those operating within legal bounds.

(With inputs from PTI)