A small vegetable vendor from Haveri, Karnataka, has received a massive GST notice of ₹29 lakh, leaving him stunned. Shankargouda Hadimani, who runs a tiny vegetable stall near the Municipal High School, says he has no idea how he will manage to pay such a large amount.

Shankargouda has been selling vegetables for four years. Most of his customers pay through UPI or other digital methods, as carrying cash is less common these days. Trouble began when GST officials sent him a notice claiming he had carried out transactions worth ₹1.63 crore over four years and now owed ₹29 lakh in taxes.

He explains that he buys fresh vegetables directly from farmers and sells them unprocessed at his stall. He also adds that he regularly files income tax returns and maintains proper records. Now, the notice has left him confused and deeply worried, as arranging such a large sum seems impossible for him.

No GST on fresh vegetables

As per ClearTax, GST does not apply to fresh and unprocessed vegetables. This means vendors like Shankargouda, who deal in fresh produce bought directly from farmers, are not required to pay GST.

Digital transactions under scrutiny

Recently, the Karnataka GST department announced that they are keeping a close watch on traders accepting digital payments. On July 12, 2025, they said that if any business crosses the turnover limit set for GST registration and fails to register, a notice will be issued. After this announcement, many small vendors stopped using UPI and switched to cash-only payments.

Officials warn against hiding income

On July 17, 2025, the GST department said they had noticed traders avoiding UPI payments and shifting to cash to avoid scrutiny. They warned that GST is applicable on total income, whether received in cash or digitally — and that action would be taken against those trying to hide their earnings.

Small vendors fearful and confused

Incidents like Shankargouda’s have left many small traders anxious. They feel trapped, if they continue accepting UPI, they risk receiving hefty tax notices. But if they stop using digital payments, they may lose customers. Many now feel unsure about how to manage their business without getting into trouble.