In recent weeks, Bengaluru has witnessed a surprising shift—many small vendors are boycotting UPI payments and returning to cash transactions. This move comes after thousands of street vendors and small business owners received GST notices, some demanding amounts as high as ₹40 lakh. These notices, based on UPI transaction data, triggered fear among traders, who felt they were being unfairly targeted.
Why Are Vendors Protesting?
For many small businesses, especially those selling essentials like vegetables, milk, and unbranded food, the GST threshold of ₹40 lakh is rarely crossed in actual sales. However, the government reportedly relied on UPI inflow data to estimate turnover, leading to panic among vendors who claimed that the amounts included personal and non-taxable transactions. With profit margins as low as 5–10%, such sudden demands could devastate their livelihoods.
The Boycott in Action
Across Bengaluru, QR codes at stalls have been taken down, replaced by signs reading “Cash Only”. Markets like KR Market and other business hubs saw a rapid switch back to cash. Trade associations even staged protests, including a two-day strike on July 23–24, and a sit-in demonstration at Freedom Park on July 25.
Government Response
The Karnataka government quickly stepped in. Chief Minister Siddaramaiah and state tax officials held discussions with traders, assuring them that notices were preliminary inquiries, not final demands. They also promised waivers for those dealing only in exempt goods, along with awareness programs to help vendors understand GST rules.
What This Means for Digital India
This boycott highlights a bigger issue—trust in digital systems. If small businesses believe that UPI use leads directly to heavy taxation, they may avoid it altogether, undermining India’s digital payment push. Policymakers need to ensure better communication, education, and grievance mechanisms to prevent such backlash in the future.
Conclusion:
The Bengaluru UPI boycott serves as a wake-up call. Digital payment adoption must be paired with clear guidance and fair enforcement to ensure that small traders feel supported, not punished, by the system.
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