An SBI report has cautioned that aggressive tax enforcement targeting small businesses could undermine the gains of formalisation un-der the GST. In a research note, the bank cautioned that such measures risk pushing infor-mal players back into the cash economy. “A recent case from Karnataka illustrates this ten-sion, where numerous small traders and shopkeepers in Bengaluru have received dis-proportionately high tax no-tices primarily based on digital footprints such as UPI transac-tions,” the report said.
Urging moderation, the re-port said, “While the intent to capture a more accurate pic-ture of economic activity and reduce tax evasion is com-mendable, such enforcement must be balanced with sensitiv-ity. The risk is that overly ag-gressive scrutiny could drive small businesses back into the informal cash-based economy undermining the very purpose of formalisation.” SBI argues that inclusivity must remain a central tenet of GST’s future. “GST has laid the foundation for greater accountability and revenue generation, but its long-term success will depend on ensuring that it empowers all stakeholders, especially small traders, instead of pena-lising them.”
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