UPI was a great innovation towards digital India, and many street vendors started providing UPI QR code in their business and they started receiving digital payments and it was all very great. People also liked it so much because they don't have to carry cash for purchases. But recently, the vendors have started going back to cash-based payments, and they have started replacing their QR code boards with ONLY CASH boards when they started receiving income tax notices from the tax department.
This is an expected thing because the government wanted to bring digital payments just to keep track of what is happening in every business. But when the government identified that there were many vendors, even though they were small businesses, they were making a lot of money per month without paying any taxes. There is a threshold set for every business on how much money they are exempted from tax. Some small vendors, when they were dealing with cash, didn't know the exact numbers, and they thought they were doing a small business.
Today, after the government started checking the UPI transactions, they were able to see the volume of the payments, and they are able to keep a check on those vendors. Some vendors might look like small shop businessmen, but they would easily make several thousands per day and several lakhs per month. Only when the payments were made digital were these things very much visible, and the tax department started sending notice to the vendors.
Now, after receiving the notice, the vendors are not making plans to pay the tax, but instead they want to switch back to the older method of collecting cash from the consumers, through which it becomes very hard for the government to trace. Not just in Karnataka, but this is happening in many places across India where the small vendors are now very careful about online payments, and they are going back to the cash mode. Some vendors are very careful and they keep things 50 50 where half of the payments are accepted in cash and the other half is accepted online, and they pay taxes only for the money that was collected online.
Many vendors are also clever, and they have never participated in this game. From the begining, they were using cash and are still using cash as the only payment collection. But some street vendors thought that they were losing an opportunity if they don't provide UPI payments. But in this sector, it is very hard to find out how much would be their turn over. The reason is that these vendors also invest their money in purchasing raw materials. Not everything is just service; there are also products involved. Not all small vendors maintain proper income and expenditure, and when the tax department ask question, it is a head ache for them to submit the details to them.
I would say not just small vendors but the other individuals like freelancers, doctors, skilled labors, and Lawyers also collect only in cash so that they don't have to discolse the value completely to the government, and not all the customers demand receipts from them.
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