CM Siddaramaiah says 3-yr-old tax arrears won't be pursued, traders call off strike

Bengaluru: Karnataka Chief Minister Siddaramaiah on Wednesday announced that the state government will not pursue tax notices issued to traders for arrears on exempted goods and services over the past three years. Following this, traders agreed to call off their planned strike on July 25 in the city.

The protest had been triggered by tax notices linked to Unified Payment Interface (UPI) transactions, with traders in parts of Bengaluru and across Karnataka "calling for a boycott of UPI payments."

According to the Commercial Taxes Department, around 6,000 such notices were issued across the state based on UPI transaction data.

"Old tax arrears will not be pursued, provided all such traders register under the GST and begin paying GST moving forward," Siddaramaiah added.

"I told the traders not to go on strike or stage a demonstration at Freedom Park. They have agreed to withdraw their agitation," the chief minister told reporters after meeting with the trader community.

Siddaramaiah said, "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."

Trade bodies, including those from the Federation of Karnataka Chambers of Commerce and Industry (FKCCI), raised concerns about confusion among small traders over GST notices, many of which include loan amounts and personal transactions.

The chief minister said the government will not pursue these arrears and will ensure traders do not face problems—provided they register with the Commercial Tax Department.

"Traders must register. Registration is mandatory because everyone needs to be brought within the tax net," he said.

He clarified that businesses dealing exclusively in exempted goods will not be required to register.

"We will not pursue notices pertaining to goods and services that are exempted—such as bread, milk, essential food items, fruits and vegetables, flowers, and tender coconut," Siddaramaiah explained.

He also announced the setting up of a helpline.

"There is no need to register with the Commercial Taxes Department for exempted goods. We will not take any action regarding such notices," the chief minister reiterated.

The chief minister, in a statement, clarified that notices were issued only to traders with UPI transactions exceeding Rs 40 lakh, primarily to prompt GST registration.

Siddaramaiah reaffirmed his commitment to supporting small traders and ensuring lawful business practices.

He said the government will assist in timely tax payments and strengthen the existing helpline for better accessibility.

Karnataka ranks second in India in GST collection and shares 50 per cent of its GST revenue with the Centre, as determined by the GST Council chaired by the Union Finance Minister Nirmala Sitharaman, according to the statement from the chief minister’s office.

The government reiterated its focus on empowering small traders and boosting purchasing power through various initiatives.