In a surprising turn, Bengaluru once championed as a leader in digital payments is witnessing a reversal, with numerous small vendors now rejecting UPI transactions in favor of cash. Local shopkeepers have begun displaying signs stating “No UPI, only cash,” citing recent Goods and Services Tax compliance notices citing undeclared turnover through digital channels.

Traders report they have received GST notices for conducting significant business often in the range of ₹40 lakh or more via UPI without proper registration. This has led to fears of tax liabilities and legal hassles, prompting them to avoid digital trails altogether. One vendor said they rely on slim daily profits and cannot risk penalties or scrutiny linked to transactions recorded digitally .

Tax experts warn that this shift could undermine India’s push for a less-cash economy and jeopardize UPI adoption momentum. The Karnataka Commercial Tax Department clarifies that notices are based on actual turnover crossing mandatory thresholds and urges compliance rather than retreating to cash .