a move away from digital payments like UPI (Unified Payments Interface) and back to cash. This shift is reportedly happening in response to an increase in GST (Goods and Services Tax) notices being issued to vendors whose turnover, tracked through digital transactions, has exceeded the mandatory registration threshold.
The GST Registration Threshold
Under Indian law, businesses must register for GST if their annual turnover surpasses a specific limit. For those who supply goods, the threshold is ₹40 lakh. For those who provide services, it’s ₹20 lakh. suggests that for many small businesses, their UPI transaction data is now being used by tax authorities to determine if they’ve crossed this threshold, leading to an influx of GST notices.
The Problem with UPI Data
While the government has heavily promoted digital payments, making them a popular and convenient choice for both businesses and customers, the video points out a key issue. For many small vendors, UPI isn’t just used for business transactions. It’s also used for personal finances, such as receiving money from friends or repaying loans. When all these transactions are combined, the total amount can quickly exceed the GST threshold, even if the actual business turnover is much lower.
This has led to a situation where vendors, particularly street vendors, are receiving GST notices and are now shunning UPI, putting up signs that say, “No UPI, Only Cash.
Is Avoiding UPI the Solution?
makes it clear that avoiding UPI is not the correct solution. It’s a temporary fix that doesn’t address the underlying issue. Instead of simply switching back to cash, businesses should first understand why they are receiving the notice and whether it is legally applicable to them. The video provides an example of a vegetable vendor whose supplies are often exempt from GST. In such a case, the GST notice may not be applicable.
The core advice is that if you receive a GST notice, you must:
- Check the details: Carefully review the notice to ensure it is valid and applicable to your business.
- Understand the law: Determine if your business activities and turnover actually require GST registration.
- Respond effectively: The video advises business owners to learn how to properly draft a response to a GST notice, addressing the specific points raised by the tax department.