Karnataka Govt Waives Three-Year GST Arrears For Small Traders, Suspends Protest Movement

Bengaluru, Jul 24 (KNN) Karnataka Chief Minister Siddaramaiah convened a meeting on Wednesday with traders and commercial organisations to address mounting concerns over GST notices issued by the Commercial Taxes Department to small businesses across the state.

The Chief Minister announced that the government would waive GST arrears accumulated over the past three years, a decision that led to the immediate suspension of ongoing trader protests.

However, he emphasised that all eligible businesses must register under the GST framework and maintain compliance with future tax obligations.

Siddaramaiah clarified that essential commodities including milk, bread, vegetables, coconut, tender coconut, meat, flowers, and agricultural products sold by street vendors remain exempt from GST requirements.

The exemptions are designed to protect vendors dealing in basic necessities from additional tax burdens.

The Commercial Taxes Department had issued approximately 9,000 notices to traders with annual turnovers exceeding Rs 40 lakh.

These notices were generated through tracking UPI transactions, a method that has drawn criticism from the business community.

Traders had demanded the complete withdrawal of these notices, citing confusion and potential inclusion of non-business transactions such as loans and personal transfers.

Under the resolution announced by the Chief Minister, historical tax arrears will not be pursued against traders who agree to register under the GST system and commit to regular tax payments going forward.

The government plans to conduct educational workshops to enhance GST awareness among small business owners, with department officials participating to provide guidance and support.

Trade representatives, including Federation of Karnataka Chambers of Commerce and Industry (FKCCI) officials, had highlighted widespread confusion among small traders regarding the scope and application of GST notices.

Many businesses reported receiving notices that inadvertently included personal financial transactions and loan amounts, creating additional compliance challenges.

The state government reaffirmed its commitment to supporting small-scale enterprises while ensuring adherence to legal business practices.

Officials promised to provide assistance mechanisms to help traders meet their tax obligations in a timely manner.

The Chief Minister noted that GST rates and policies are determined by the GST Council, which operates under the chairmanship of the Union Finance Minister.

Prior to the resolution, several traders and shopkeepers had demonstrated their opposition by conducting business while wearing black armbands on Wednesday.

Some establishments chose to close entirely in protest against the taxation of UPI transactions for businesses with annual turnovers exceeding Rs 40 lakh.

The Karnataka Karmika Parishat had scheduled a demonstration at Freedom Park for Friday, while the Karnataka State Association of Bakeries, Condiments and Small Enterprises had planned a protest for Thursday.

These planned demonstrations have been suspended following the Chief Minister's announcement and the successful resolution of the immediate concerns.

(KNN Bureau)