UPI Payment / Only cash... Shopkeepers in this city are no longer accepting payments via UPI!

UPI Payment: Bengaluru, which is considered the Silicon Valley of India and the bastion of digital payments, is now going through a strange change. The QR code stickers that were once seen on every shop in the streets of the city are now slowly disappearing. In their place, printouts or handwritten notes are hung on the shops, on which it is clearly written - "No UPI, only cash!" Small shopkeepers, who were once the flag-bearers of Digital India, are now shying away from accepting UPI payments. Many have completely stopped using payment apps. What has happened that Bengaluru, which was called the champion of digital payments, is now returning to cash?

Shopkeepers' problems: Why is UPI becoming a headache?

According to a recent report by the Economic Times, many small shopkeepers in Bengaluru have reduced the use of UPI, and some have abandoned it completely. Shankar (full name not disclosed), a grocery shopkeeper from Horamavu, said, "I do a business of about Rs 3,000 a day, out of which I make very little profit. It has become difficult for me to accept payments through UPI now." Many shopkeepers like Shankar say that UPI transactions are now becoming a cause of trouble for them.

The biggest reason for this change is GST notices. Thousands of roadside food carts, tea-biscuit shops and small business shopkeepers in Bengaluru have received notices from the GST department. In some cases, these notices are worth lakhs of rupees. Vinay K. Srinivas, joint secretary and lawyer of Bangalore Street Vendors Association, said, "Shopkeepers are scared of the strictness of GST officials and the fear of heavy tax notices. Many feel that due to these notices they may have to close their shops." This fear is pushing shopkeepers to abandon UPI and move towards cash.

Pressure of GST law

According to the GST law, if a trader sells goods and his annual income is more than Rs 40 lakh, then it is mandatory for him to get GST registration. For service providing businesses, this limit is Rs 20 lakh. The Commercial Tax Department says that they have analyzed the UPI transaction data from 2021-22 till now and sent notices to such traders who earned more than Rs 40 lakh, but neither got GST registration nor paid tax.

An official of the department said, "On the basis of data, we have identified those traders whose income from UPI transactions is more than the prescribed limit. In such a situation, they will have to get registered and pay tax." But for small shopkeepers this process is complicated and scary. Many shopkeepers are not fully aware of the GST rules, and they are stopping the use of UPI due to fear of notice.

Return of cash: What is its effect?

In a city like Bengaluru, where digital payments had made people's lives easier, the return of cash raises many questions. Small shopkeepers say that they do not fear GST notice in cash transactions, because no digital record of the transaction is created. But the other aspect of this is that customers now have to withdraw cash as before, which is against the mission of Digital India.

Apart from this, the business of small traders can also be affected due to less use of UPI. Many customers, especially young and tech-savvy people, now prefer cashless payments. If shopkeepers do not accept UPI, they may lose such customers.

What is the solution?

To solve this problem, experts say that GST rules will have to be simplified further for small traders. Vinay K. Srinivas suggested, "The process of GST registration and tax filing needs to be simplified for small shopkeepers. Also, campaigns should be run at the ground level to make them aware."

Apart from this, the government and the GST department will have to arrange for special exemptions or simpler tax slabs for small traders, so that they are not afraid to adopt digital payments. In a city like Bengaluru, which is leading the Digital India movement, it is important to keep UPI afloat.