Small drops maketh an ocean, goes an old adage. A small roadside vendor selling fruits and vegetables was in for a shock when he received a notice from the Goods and Services Tax department for a whopping INR 29 lakhs.
Shankargouda Hadimani has been running his small shop near the Municipal High School grounds at Haveri in Karnataka for the past four years, Deccan Herald newspaper reported.
Over the last 4 years, Shankargouda is said to have earned INR 1.63 Cr, through digital transactions, mostly as part of payments from customers who bought vegetables from him.
Though the number looks huge, the daily average sale works out to INR 11,000. Quite reasonable for a road side shopkeeper, though not very surprising.
Shankargouda said, “I procure vegetables from the farmers and sell the produce at the small shop I own near Municipal High School grounds. Nowadays, customers favour UPI payments.
I promptly file I-T returns every year. I have records for the same.
The GST officials have served a tax demand of ₹29 lakh. How can I pay such a huge amount?”
This GST notice has left the entire unorganised retail trade in distress and shock.
Over the last few days, several small traders in Bangalore and rest of Karnataka have stopped accepting UPI payments from shoppers, for the scare of receiving similar GST notices.
Editor’s Note
What the Law states –
GST is not applicable on fresh and unprocessed vegetables and fruits. However, the moment they are sold in packs – whether they are frozen, packaged or labelled and billed, GST @ 5% kicks in.
Anyone with a business income of INR 2.5 lakhs and above annually are required to file Income Tax returns.
Small business persons with annual income under INR 50 lakhs opt for presumptive taxation, where by they can declare a fixed percentage of their turnover as profit.
In this case, Shankargouda’s monthly revenue is INR 3.30 lakhs and with an estimated net profit @ 5% is INR 16,000. Therefore, he may not even qualify to pay income tax!
The said notice from the GST department to a roadside vendor selling fresh produce on the basis of his digital income has left the unorganised retail trade community confused with the metrics used for such governance.