‘No UPI, Please’: What’s Scaring Bengaluru’s Vendors Back to Cash?
Nidhi | Jul 17, 2025, 15:09 IST
( Image credit : Timeslife )
Highlight of the story: Bengaluru, India’s IT hub, is seeing a surprising trend: vendors rejecting UPI payments and going cash-only. The shift comes after thousands of small businesses reportedly received GST notices based on their digital transaction data, sparking fear of heavy tax demands and harassment. Many vendors, unsure of tax laws and fearing eviction, now see cash as the safer option. This article explores why Bengaluru’s digital dream is faltering, the GST law’s role, and the larger implications for Digital India’s promise.
Bengaluru, the beating heart of India’s digital revolution, is known for its app-based food deliveries, fintech startups, and mobile-first banking culture. But something strange is happening on its streets. Across areas like Shivajinagar, Malleswaram, KR Market, and Indiranagar, new signs are popping up on pushcarts, fruit stalls, and tea shops. They all carry the same message: “No UPI, only cash.”
At first glance, it seems absurd. Why would India's tech capital reject the very payment method it helped popularize? The answer lies in a growing climate of fear among small vendors over tax scrutiny.
But for these small vendors, most of whom operate informally without proper accounting systems, that equation doesn’t always hold. A ₹1,000 transfer on UPI might be:
A loan from a friend Money sent by a relative A shared expense, not business incomeVinay K Sreenivasa, advocate and joint secretary of the Federation of Bengaluru Street Vendors Associations, says the notices have triggered widespread panic. “There’s fear not just of fines but also of eviction by civic authorities,” he said. Many vendors are now refusing digital payments entirely to stay off the radar.
However, enforcement is where confusion begins. HD Arun Kumar, former additional commissioner of commercial taxes in Karnataka, clarified that tax authorities cannot assume turnover based only on digital inflow. Officers must provide proof before issuing tax demands.
This is where many experts believe the system is failing. UPI credits are being treated as business revenue without properly investigating their source or nature. And in that process, thousands of vendors with limited education and no formal systems are being pushed into panic mode.
Karnataka’s tax department is under mounting pressure to meet a revenue target of ₹1.2 lakh crore. The state government also has welfare commitments amounting to ₹52,000 crore and increasing infrastructure demands. As a result, many believe the informal sector is being squeezed harder than ever.
And unlike large corporations with accountants and legal advisors, a roadside vendor has little defense against sudden notices filled with complex legal terms.
The political pressure is building too. BJP MLA S Suresh Kumar has said he will urge Chief Minister Siddaramaiah to intervene. Legal experts and former tax officials are also calling for a more nuanced approach that focuses on education and gradual onboarding into the tax system rather than shock enforcement.
But the fear has already taken root. In a city once celebrated for going cashless, the chai seller and the fruit vendor are now asking for paper notes instead of QR scans.
Because when trust in the digital system is replaced with anxiety, even the most tech-forward city can turn back to cash.
At first glance, it seems absurd. Why would India's tech capital reject the very payment method it helped popularize? The answer lies in a growing climate of fear among small vendors over tax scrutiny.
The Fear Behind the Cash-Only Signs
Cash
( Image credit : Pexels )
But for these small vendors, most of whom operate informally without proper accounting systems, that equation doesn’t always hold. A ₹1,000 transfer on UPI might be:
A loan from a friend Money sent by a relative A shared expense, not business incomeVinay K Sreenivasa, advocate and joint secretary of the Federation of Bengaluru Street Vendors Associations, says the notices have triggered widespread panic. “There’s fear not just of fines but also of eviction by civic authorities,” he said. Many vendors are now refusing digital payments entirely to stay off the radar.
What the GST Law Actually Says
GST collections rise 6.2
( Image credit : ANI )
However, enforcement is where confusion begins. HD Arun Kumar, former additional commissioner of commercial taxes in Karnataka, clarified that tax authorities cannot assume turnover based only on digital inflow. Officers must provide proof before issuing tax demands.
This is where many experts believe the system is failing. UPI credits are being treated as business revenue without properly investigating their source or nature. And in that process, thousands of vendors with limited education and no formal systems are being pushed into panic mode.
A Blow to Digital India’s Promise
10 years of Digital India
( Image credit : IANS )
Karnataka’s tax department is under mounting pressure to meet a revenue target of ₹1.2 lakh crore. The state government also has welfare commitments amounting to ₹52,000 crore and increasing infrastructure demands. As a result, many believe the informal sector is being squeezed harder than ever.
And unlike large corporations with accountants and legal advisors, a roadside vendor has little defense against sudden notices filled with complex legal terms.
What Lies Ahead?
But the fear has already taken root. In a city once celebrated for going cashless, the chai seller and the fruit vendor are now asking for paper notes instead of QR scans.
Because when trust in the digital system is replaced with anxiety, even the most tech-forward city can turn back to cash.