Bengaluru traders call for Bandh on 25th July against GST notices linked to UPI transactions, put display boards saying ‘Cash Only’: Read why

On 25th July, Bengaluru is set to see a city-wide bandh. Thousands of small business owners are set to protest against GST notices issued by the Karnataka Commercial Taxes Department. The notices target businesses that accepted digital payments exceeding GST registration thresholds, sparking fears of financial ruin and a rapid shift back to cash transactions in India’s tech capital.

Why are traders protesting?

Bangaluru was one of the first cities to adopt UPI very fast, but now it’s witnessing a sharp reversal. Small vendors across the city are abandoning UPI transactions and returning to cash.

Based on UPI transaction history from FY 2021-22 onwards, the department identified 14,000 traders whose UPI transactions crossed ₹40 lakh (for goods) or ₹20 lakh (for services), which are the legal GST thresholds, yet they hadn’t registered under GST. Over 5,500 have received notices of tax demands. Some exceeding ₹2 crore on a single PAN card.

Many unregistered vendors, including roadside stalls and small shops, embraced UPI during the digital push but now face penalties for non-compliance. Traders argue the notices ignore their actual low turnovers (e.g., daily sales of ₹3,000) and mix personal/family transfers with business income.

Traders say they are being unfairly targeted and fear harassment, seizure of goods, and even eviction from public spaces. Advocate Vinay K Sreenivasa, joint secretary of the Federation of Bengaluru Street Vendors Associations, notes, “Many fear harassment by GST officers and eviction by civic authorities”.

Traders have announced a three-day protest plan. On 23rd July, milk sales will be suspended. Gutka and cigarette sales will be halted on 24th July, and Full closure of bakeries, condiment shops and petty stores will be on 25th June.

Reversal of digital adoption

QR codes are being removed by the vendors. “No UPI, Only Cash” signs can be seen in the markets like KR Market, Shivajinagar, and Horamavu and many other areas. Traders are abandoning the UPI to avoid scrutiny, undermining India’s digital payment goals. Shanker, a shopkeeper in Horamavu, told, “I’ve stopped accepting UPI completely.”

No UPI, Only Cash signboards | Photo Credit: X @HubliCityeGroup

Government stance

The tax department insists notices targeted only threshold violators and urges registration under GST or the Composition Scheme. Former tax official H.D. Arun Kumar stresses authorities must “validate data before enforcing penalties”.

Broader implications

Experts warn similar crackdowns could spread to Mumbai and other cities as states chase revenue targets. Karnataka aims to collect ₹1.20 lakh crore in 2025–26 amid welfare funding pressures .

The 25th July bandh highlights a crisis of trust between micro-businesses and digital governance, testing policymakers’ ability to balance transparency with equitable enforcement. Many are saying that the government has failed in outreach and awareness efforts, and is fanning fear under the garb of enforcing compliance.

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