Small Vendors, Big Bills: Blame Game Begins As Vegetable Sellers, Milkmen Fear Hefty GST Burden

Last Updated:July 23, 2025, 12:57 IST

The Karnataka government blamed the Centre’s order in 2019 in the gazette to all governments regarding what should be done for those with a turnover of up to Rs 40 lakh

Small traders and vendors are worst-hit by the GST notices. (PTI Image for Representation)

A wave of distress is sweeping across Karnataka’s small-time vendors and traders as Goods and Services Tax (GST) notices, demanding lakhs of rupees, continue to be issued based on digital transactions. The latest to be hit are a milk vendor in Bengaluru and a vegetable vendor in Haveri, both reeling from colossal GST demands, prompting the Karnataka government to shift blame squarely onto the Union government.

Ravi, a milk vendor operating from Mariyammana Palya in Bengaluru, has been hit with a staggering Rs 23 lakh GST notice. This comes despite his reported turnover of Rs 59 lakh last year, with the notice specifically targeting transactions conducted within that period.

A bewildered Ravi expressed his dismay, stating: “I am a milk vendor, how can I respond to a GST notice? I sell milk in the morning and then deposit it in the bank. They have sent a notice for Rs 1.03 crore in transactions on PhonePe and PayTM. How can I pay GST for this? They ask for 18%. They have sent the notice on WhatsApp and through a letter."

Similarly, in Haveri, Shankargouda Hadimani, who runs “Sairam Farm Fresh" as a vegetable vendor, has been slapped with a Rs 29 lakh GST demand. The department issued the notice via WhatsApp, citing over Rs 1 crore in digital transactions through Google Pay and PhonePe over the past four years. This has left Shankargouda in deep distress, especially as he primarily deals in fresh vegetables, which are largely GST-exempt.

“I have been in the vegetable and fruit business since 2021. When I first tried to get a GST number, I was told that vegetables and fruits don’t require a GST number, and I could just continue my business as is. So, I obtained a municipal license, a vegetable license, and a fruit license, and started my business. It’s been four years now, and I’ve already done business worth Rs 1.63 crore. Now, I’ve received a notice saying I need to pay a tax of Rs 29.63 lakh for that Rs 1.63 crore.

“How am I supposed to pay Rs 29 lakh? We are small vendors dealing in vegetables and fruits. If they ask us to pay Rs 29 lakh, where do we get it from? This is causing us a lot of trouble. I urge the authorities concerned and the government to resolve this issue. If they help us, we can continue our business smoothly. Otherwise, we will have to remove all UPI scanners and only deal in cash. This will also result in losses for me because my business will be reduced by half, leading to further difficulties."

The Karnataka government has been quick to react, with deputy chief minister DK Shivakumar pointing fingers at the central government. “The government of India has already issued an order in 2019 in the gazette to all governments regarding what should be done for those with a turnover of up to Rs 40 lakh. Why is BJP just watching this? This is their work. They should immediately withdraw this trouble caused to the poor," he said. Shivakumar also revealed the extent of the issue, stating, “Already, the first notice has gone to 14,000 people. You all have noticed that Rahul Gandhi had already expressed his protest regarding this. The chief minister will call the officers and give whatever guidance is needed."

Industries minister MB Patil echoed similar sentiments, highlighting the broad scope of GST. “Now GST has been imposed on everything. Have they left out even bakeries from GST? So, there is confusion about that today. They will fix it today. They have put GST on bakeries and everything else, have they left anyone out? Have they left out even puffed rice? Whatever is packed, everything comes under it. Milk packets also come under it. Everything that is packed will come under GST. We are saying that the Union government is taking responsibility of all GST," Patil explained.

However, former chief minister Basavaraj Bommai accused the state government of shying away from its responsibility in the matter.

“In the context of accepting payments like UPI, they have given notices. I had said that the chief minister should intervene. I saw the chief minister giving a statement that it is a central tax and concerns them. The chief minister is shying away from his responsibility. GST decisions are not taken by the Union government alone. The central and state governments, all the states together, take decisions in the GST Council. Since the chief minister is also the finance minister, I once again urge him to do this work," he said.

In response to the growing concern, Siddaramaiah is scheduled to hold a crucial meeting on Wednesday with GST and commercial taxes officials to discuss the ongoing issue of notices being sent to small traders and vendors across the state. For now, the outcome of this meeting is eagerly awaited by the beleaguered small business community in Karnataka.

Harish Upadhya

Harish Upadhya, an Assistant Editor at CNN-News18, reports from Bengaluru. Political reporting is his forte. He also tracks India's space journey, and is passionate about environmental reporting and RTI investi...Read More

Harish Upadhya, an Assistant Editor at CNN-News18, reports from Bengaluru. Political reporting is his forte. He also tracks India's space journey, and is passionate about environmental reporting and RTI investi...

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