Amid protests over GST notices sent to traders in Karnataka, Akshat Shrivastava, founder of Wisdom Hatch, on Wednesday weighed in on the impact on compact shopkeepers. He argued that the notices could severely disrupt informal retail and warned that expecting compliance from vfinishors with limited accounting access was unrealistic.
“Small shopkeepers are ditching UPI payments. And, going back to cash,” Shrivastava wrote on X. “See, compact businesses have very compact profit margins to launch with. Many of these vfinishors-if they register under GST-would have to start adding GST to their final bills. This could be upward of 18%.”
According to him, such a jump in prices could push away customers. “The seller wants to sell more. The purchaseer wants to purchase cheap. Additional ‘GST’ drops sales.”
He further flagged the practical difficulty in compliance. “Not to mention: that compact vfinishors usually do not bifurcate their personal and professional accounts. Many in their families cannot even receive access to bank accounts. So a father running a shop would take money on behalf of their son, daughter, wife, brother etc. All this can be tagged as ‘income’. And GST can be slapped on that. Expecting compact shopkeepers to do sophisticated accounting is stupidity.”
Shrivastava acknowledged the issue of tax evasion but criticised the state’s enforcement priorities. “Fine: many compact shopkeepers evade taxes. True. Better system requireds to be built. But, seriously: hunting compact guys? That’s what the priority is? When you let political parties, IPL dudes, corporate honchoes run free?”
“1000s of crores are outright wasted and siphoned off. But, the focus is to grab 100s of crores, while forgoing 1000s,” he declared.
Shrivastava’s remarks come as nearly 6,000 GST demand notices have been sent to compact traders based on UPI transaction data. Karnataka’s Commercial Tax Department has clarified that these notices are not final tax demands.
Joint Commissioner Meera Suresh Pandit explained that traders exceeding ₹20 lakh in services or ₹40 lakh in goods are legally required to register under GST. “The registration empowers the trader to collect taxes from the consumers and pay it to the government,” she declared. “But when the dealers collect them and fail to remit them, they are treated as unregistered persons, and we issue notices accordingly.”
She also underlined that the data was indicative, not conclusive: “We don’t know whether the turnover is exempt, partially taxable, or fully taxable. If the reply is convincing, the notice will be dropped.”
Pandit urged traders not to panic. “Some are being misled. But if they want relief within legal provisions, I request them to come to the department. We will guide them as per the law.”
Trade activist Sajjanraj Mehta also criticised the approach, stateing, “Many compact traders were unaware that their UPI inflows, often a mix of business and personal transactions, would be treated as undeclared turnover. The fairness issue lies not in enforcement itself, but in the suddenness and lack of clarity.”
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