The move comes after backlash following the issuance of GST notices to thousands of small and micro businesses, many of whom operate outside the formal tax net.
Chief minister Siddaramaiah on Wednesday assured that small traders who register under GST (goods and services tax) will not be made to pay past dues, in an effort to address growing unrest over tax notices served by the state’s Commercial Tax Department.
The chief minister said that businesses dealing in tax-exempt items such as milk, vegetables, fruits and meat, who may have received notices, would not be pursued for tax recovery (PTI)
The chief minister said that businesses dealing in tax-exempt items such as milk, vegetables, fruits and meat, who may have received notices, would not be pursued for tax recovery (PTI)
“Only those who had annual UPI transactions above ₹40 lakh have been issued GST notices,” Siddaramaiah said. “Initially, the notices were just to ask them to register under GST. If they register now, the government will not recover previous dues.”
The move comes in response to backlash from sections of the trading community, following the issuance of GST notices to thousands of small and micro businesses, many of whom operate outside the formal tax net. Siddaramaiah held a meeting with representatives from trade bodies, including the Federation of Karnataka Chambers of Commerce and Industry (FKCCI), and later addressed the media to clarify the government’s position.
The chief minister added that businesses dealing in tax-exempt items such as milk, vegetables, fruits and meat, who may have received notices, would not be pursued for tax recovery. “Though some such traders may have received notices, no tax will be collected from them. But those who are legally liable must pay their dues,” he said.
He added that “we will not collect taxes from traders dealing in exempted goods, even if notices have been issued. I have also instructed officials not to pursue cases related to notices for clearing arrears from the past two to three years.”
Siddaramaiah confirmed that around 18,000 notices had been issued to approximately 9,000 traders over the past two to three years. “Old tax arrears that have been included in the notices will be waived. The government will not recover those dues,” he said. “They must mandatorily register under GST.”
He acknowledged that excessive reliance on UPI data had led to confusion and unnecessary panic. “If UPI-based transactions are avoided, it will affect trade transparency. Our government supports small traders. Our goal is not to harass traders. We will assist them in complying with tax laws. The government is on the side of small businesses,” he said.
During the meeting, trader representatives flagged widespread confusion over the notices. “There is confusion among small traders regarding the GST notices. Even loan amounts and personal transactions have been included,” they said, requesting a more humane approach. “Traders should be given an opportunity to pay taxes with relief. They should be allowed to directly approach the department without involving middlemen,” they told the CM.
They also called for a dedicated helpline and awareness drives to address misinformation and build clarity. “Due to lack of proper information about GST, there is a lot of misunderstanding. Awareness campaigns must be conducted. One-time waiver of old dues is essential,” they said.
Responding to these demands, Siddaramaiah said a helpline already exists but assured that it would be strengthened. He also instructed officials to conduct workshops for trade and street vendor associations to improve outreach and compliance.
In response to the GST row, state BJP president BY Vijayendra accused the government of using GST notices to meet revenue targets. He claimed that small vendors — including those selling essential items — were being indiscriminately served notices for 18% tax.
“The Commercial Tax Department issuing GST notices to small and micro traders has sparked widespread concern. These traders are deeply worried, while the chief minister and his ministers are attempting to shift the blame on the Centre,” Vijayendra said.
“At a time when the state coffers are empty, the CM is pressuring tax officials to issue recovery notices,” he added.
The BJP leader alleged that the chief minister had fixed tax collection targets to overtake Maharashtra in GST revenue rankings. “I urge the chief minister to immediately halt the issuance of these notices to small and micro traders and to withdraw those already served,” he said, pledging BJP’s support to the ongoing trader protests.
