Street vendors are now on the radar of the GST department. A recent case in Tamil Nadu highlights the risks vendors face if their earnings cross the GST registration limit of Rs 40 lakh per year.
A popular pani puri vendor was flagged after recording transactions of Rs 40,11,019 in FY 2023-24, mostly through UPI payments. GST laws require businesses crossing this turnover to register and comply with tax rules.
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Failure to do so can lead to fines of up to Rs 10,000 or 10% of the tax owed.
While digital payments have helped small businesses grow, they also bring them under tax scrutiny. Many street vendors lack the knowledge or systems to handle GST compliance, making them vulnerable to penalties.
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Some fear this could discourage vendors from accepting digital payments, pushing them back to cash transactions.
Social media is buzzing with mixed reactions. Some joked about a street vendor earning like a corporate executive, while others raised concerns about misuse of accounts or additional business activities.
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However, this case raises a bigger issue. India’s small vendors, who are essential to the economy, need more support to handle complex tax systems.
Simplified rules, along with education on compliance, can help these vendors avoid penalties and continue growing.
Without such measures, the GST system could hurt the very people it aims to include, forcing them back into the shadows of the informal economy.
