A pani puri wala from Tamil Nadu received a tax notice for earning 40 lakh per year, which is related to GST rather than income tax, and the notice was based on his UPI turnover instead of his profit. The GST notification is because the department believes he has not registered himself even though he has passed the registration threshold.
The notice does not indicate how long it covers, but it is based on Phonepe and Razorpay records for 2021-22, 2022-23, and 2023-24, indicating that the notice considers three years of transactions.
Nevertheless, the notice is not given for a three-year term because the yearly turnover surpasses the threshold in any particular year. The yearly sales, not the profit, trigger the requirement that goods providers register for GST, which is set at an annual turnover of 40 lakh rupees.
The notice only relates to the time when the threshold was crossed; however, once the threshold is met, the duty to register for GST is in effect annually.
On social media, there has been recent talk of Pani Puri wala getting GST letters after transacting more than Rs 40 lakh using online payment services like RazorPay and PhonePe. What’s entertaining, though, are the humorous responses to these notices!
‘Better get registered under GST’ In response to this news, social media has exploded with humorous replies.
One user said, “Time for him to enter capital markets: PP Waterfalls,” while another cheekily suggested, “Excellent export opportunities in London.”
Some even joked about a “foreign collaboration,” one user jokingly pitched an “80% export unit.”
On a more practical note, some suggested, “He should better get himself registered under GST.” In contrast, others pondered whether vendors could avoid the system by using multiple mobile numbers and QR codes.
And yet someone else said, “Time to change career!”
Do Street Vendors Need to Pay GST and Income Tax?
GST Exemption for Street Vendors: Street vendors are generally exempt from GST because they operate on a small scale. GST registration is mandatory only for businesses with an annual turnover exceeding Rs 40 lakhs.
Income Tax Exemption: Income tax applies only to individuals whose annual income exceeds Rs 2.5 lakhs (for those under 60 years of age). Many street vendors earn below this limit, so they are not required to pay income tax.
Cash Transactions: Street vendors often receive cash payments, which prevents them from being tracked by tax authorities, keeping them outside the tax net.
Rise of Online Payments: With customers’ increasing preference for digital payments (like UPI), street vendors are now coming under the radar of tax authorities, as online transactions are traceable.
Increased Scrutiny: The shift to digital payments means that street vendors may more likely be noticed by tax authorities, potentially triggering tax-related inquiries.
