Editor's Correspondence from August 8, 2025
Published on August 8, 2025
By Rajiv Magal, Halekere Village, Karnataka
The issue of stubble burning, a persistent problem in agricultural regions, continues to be a concern for authorities. Meanwhile, the question of whether UPI data can be used to track GST evaders has been raised in the midst of the ongoing debate on tax compliance.
In the realm of small vendors, labour cost is often cited as a reason for the practice of stubble burning. As authorities grapple with this issue, they are urged to involve universities, KVKs, NGOs, and respective GPs to advise farmers on the pros and cons of stubble burning. Penalties are also suggested for farmers who engage in this harmful practice.
However, the challenge of stubble burning is not the only issue that small vendors are facing. The complexity of segregating UPI revenues into taxable and non-taxable categories is a significant burden for these vendors, who seldom keep records and have little understanding of GST laws. The majority of vendors accepting UPI payments are from the unorganised sector, operating on a low-margin, high-volume business model.
Raising the GST registration threshold to exclude small vendors from GST could ease their compliance burden. The current GST threshold is ₹40 lakh turnover for goods and ₹20 lakh for services in most states, with lower thresholds in special category states. Despite calls and challenges, these limits have been largely stable since 2019 to balance small business relief and tax compliance.
By raising the threshold further, compliance difficulties for truly small vendors dealing in mixed taxable and non-taxable UPI revenues would be reduced. However, this move could potentially reduce the tax base and government revenues. Policymakers must carefully balance these factors.
The UPI ecosystem is progressing and reducing cash use in the economy, enabling users to save and be part of inclusive growth. Yet, using UPI for detecting tax evasions may be counter-productive given the challenges small vendors face in correctly segregating UPI revenues.
Other measures to detect tax avoidance need to be strengthened, particularly in light of the fact that the current thresholds try to offer relief to small traders while maintaining compliance standards. The rejuvenation of soil affected by stubble burning takes years, and excessive use of chemical manures is a result of this practice. Judicial intervention and incentives have not resolved the issue of stubble burning, highlighting the need for continued efforts to address this problem.
In conclusion, raising GST registration thresholds for small vendors would alleviate their difficulties with UPI revenue segregation, but there are trade-offs with revenue collection and formalization that GST councils continue to weigh. The current thresholds represent a compromise that acknowledges small vendor challenges while maintaining compliance standards.
- Despite the potential of UPI data to track GST evaders, the complexity of segregating UPI revenues into taxable and non-taxable categories poses a significant challenge for small vendors, particularly those in the unorganised sector.
- The practice of stubble burning, a persistent problem in agricultural regions, is not only harmful to the environment but also a financial burden for small vendors who cite labor cost as a reason for its persistence.
- Researchers in environmental-science and financial analysts alike agree that raising the GST registration threshold could help ease the compliance burden on small vendors, reducing difficulties with UPI revenue segregation.
- As the industry of personal-finance evolves, it's crucial to find alternatives to UPI for detecting tax evasions, given the challenges small vendors face in correctly categorizing their UPI revenues.
- In the realm of the economy, the question of whether to raise GST registration thresholds for small vendors is not just a matter of business finance, but also a concern for environmental-science, as stubble burning continues to affect soil health and contribute to environment degradation.
