Waiver of Old GST Dues for Small Traders in Karnataka
Bengaluru: Amid the confusion surrounding the receipt of GST notices by small-scale traders from the Commercial Taxes Department, Chief Minister Siddaramaiah announced on Wednesday that the state would waive old tax dues for those affected.
This decision brings relief to approximately 9,000 traders statewide who received nearly 18,000 GST notices in the past two to three years. The waiver was announced following a meeting chaired by Siddaramaiah at his official residence, which included officials from the Commercial Tax Department and trade body leaders. In light of the CM’s announcement, trade groups have decided to cancel a planned protest for Thursday.
Abhilash Shetty, from the Karnataka State Association of Bakeries, Condiments, and Small Enterprises, expressed satisfaction, stating, “Our demand has been met. Many of us sell a variety of goods. While a few are exempt from GST, many others face taxes ranging from 3% to 40%. This was not considered when issuing the notices. However, the CM has assured us that these notices will not be pursued further.”
A statement released by the Chief Minister’s Office noted that trade representatives raised concerns about GST notices that included not just business transactions but also personal money transfers and loan disbursals made through UPI, leading to significant confusion. Although some GST notices were deemed legally valid, traders requested support from the government to facilitate direct tax payments without intermediaries. They also called for a special helpline and informational programs to clarify GST rules.
At a press conference following the meeting, Siddaramaiah clarified that GST notices were sent only to traders whose UPI transaction totals exceeded Rs 40 lakh over the last two to three years, aiming to encourage their registration for GST. He emphasized that essential items such as milk, vegetables, meat, fruits, bread, and tender coconuts are exempt from GST. “Even though notices were sent to traders dealing with these exempt items, no tax will be collected from them. The government will not seek old tax dues from the last two to three years,” he affirmed.
The Chief Minister highlighted Karnataka’s lead in digital payments, with 40% of all transactions occurring through UPI, surpassing the national average of 30%. He remarked that this achievement marked a considerable success for the formal economy but cautioned that halting UPI transactions could adversely impact trade and lead to significant losses for traders.
“The traders are now ready to register, and there is no longer any confusion,” Siddaramaiah assured. “The government will support legal trade and timely tax payments. We are committed to standing by small traders and will not burden them.”
He added that waiving old tax dues is contingent upon traders registering under the GST law. “Traders dealing only in exempt goods do not need to register. If their primary products are exempt, tax officials will not pursue them,” he explained.
Lastly, the government intends to organize workshops and seminars across Karnataka with tax officials and trade leaders to help traders and simplify GST compliance. The traders have agreed to register on the GST portal to prevent future confusion. Shetty also indicated plans for awareness initiatives to encourage trader registration.
