7,000 unregistered traders issued GST notices

The Commercial Taxes Department in Karnataka has issued notices to around 7,000 unregistered small traders across the state, including vendors dealing in exempted goods such as milk, vegetables, and non-branded food items. While no tax demand has been raised, the department has urged these traders to obtain Goods and Services Tax (GST) registration.

The move comes as part of the department’s efforts to ensure regulatory compliance. Officials say the notices are intended to verify the nature of goods and services being sold, especially since the department cannot independently determine if these are indeed tax-exempt.

A senior official explained that the department used data from Unified Payments Interface (UPI) transactions to identify unregistered traders. Those with digital transactions exceeding ₹40 lakh in goods or ₹20 lakh in services were flagged for further scrutiny. “Since we cannot confirm whether the items being sold are exempt or taxable, it is necessary for such traders to be registered under GST. This will help bring clarity and transparency,” the official stated.

The department emphasized that the move is not meant to harass small vendors but to improve compliance and avoid tax evasion. Most of the identified traders operate in the unorganized retail sector and have seen a surge in digital payments post-COVID. This development could significantly impact thousands of micro-businesses in Karnataka that have so far operated outside the GST net. Traders have been advised to seek assistance from tax professionals to complete their registration and remain compliant with GST norms.