GST Notices Impacting Small Traders

The news article discusses the recent actions taken by the Commercial Taxes Department against small traders and businesses regarding their non-payment of Goods and Services Tax (GST) linked to Unified Payment Interface (UPI) transactions. It highlights the government's response and ongoing discussions surrounding potential relief measures for these traders.

Summary:

• Context: Small traders and businessmen have come under scrutiny for not paying GST related to UPI transactions over the past four years.

• Notices Issued: The Commercial Taxes Department has reportedly issued notices to over 10,000 businesses, with estimates from Deputy Chief Minister D.K. Shivakumar suggesting that the total could reach around 14,000 notices.

• Root Cause: The notices pertain to traders exceeding ₹40 lakh in UPI transactions annually for those selling goods and ₹20 lakhs for those providing services. As of now, Google Pay transactions are pending assessment.

• Request for Relief: The State government plans to petition the Central government to withdraw these notices, with emphasis on the need for a consensus in the GST Council since both Central and State GST are involved.

• Tax Liability Concerns: Notably, the possible tax liabilities for the past four years have raised concerns. The notices have a retrospective focus dating from 2021 to 2025, which could lead to increased financial burdens on traders.

• Response Mechanism: Officials have been engaging with affected traders to clarify doubts. The Joint Commissioner of Commercial Tax, Meera S. Pandit, stated that notices serve as a communication tool and reassured traders that their concerns would be heard before any definitive tax demands are issued.

• Exempted Goods and Tax Clarification: Goods that are exempt from GST include vegetables, fruits, flowers, milk, unpacked food grains, handicrafts, petrol, diesel, and liquor. The official clarified that GST would only apply to non-exempt goods sold by traders.

• Demand Process: An 18% GST demand raised in the notices may be decreased based on traders' documentation and other information provided. However, it cannot be increased after demand issuance.

• Ongoing Communication: The officials assured traders enough time for response, with reminders and follow-up calls planned to facilitate the dialogue.

• Comparative Actions: Similar assessment activities regarding GST compliance are ongoing in other states like Gujarat, Tamil Nadu, and Andhra Pradesh, indicating a broader trend of scrutiny on GST payment compliance.

• Notice Format Changes: Following trader grievances, the format of issued notices has been modified to better communicate requirements and tax liabilities, growing from transaction details to simply indicating transaction thresholds requiring GST registration.

Important Points:

• Small traders are facing GST non-payment notices from the Commercial Taxes Department.
• Notices issued are likely in excess of 14,000, regarding UPI transaction thresholds of ₹40 lakh and ₹20 lakh.
• The State government intends to request the Center to withdraw these notices.
• Tax liability assessment has a retrospective nature covering 2021-2025.
• The Joint Commissioner of Commercial Tax clarified the purpose of notices and assured traders that their concerns would be addressed before final demands are issued.
• Exempt goods such as fruits, vegetables, and unbranded food are specified.
• The GST demand can potentially be reduced based on provided documentation; it cannot increase post-demand.
• The communication process with traders has been emphasized, including modifications to the notice format.