Clarification issued on tax notices to bakeries and tea shops

Bengaluru: The Karnataka Commercial Tax Department has once again issued a clarification regarding the recent tax notices sent to bakeries, condiments, and tea stalls in Bengaluru. Following earlier backlash, the department had stated that traders with annual turnover below ₹1.5 crore can opt for the Composition Tax Scheme and pay only 1% tax, offering significant relief.

Now, in a press release, the department reiterated that traders who have received notices should visit their respective tax offices and submit proper documentation explaining their turnover and eligibility. It clarified that only taxable goods are subject to tax, and exempted goods and services are not included.

The department emphasized that traders with turnover exceeding ₹40 lakh must register for GST, and 90% of eligible traders have already opted for the Composition Scheme. The remaining 10%, it said, must comply to avoid disparity in the tax system.

Officials have been instructed to raise awareness among shop owners and provide a hassle-free registration process for new GST applicants. Currently, 98,915 traders have registered under the Composition Scheme, which mandates only 1% tax—ensuring minimal burden on small business owners.

However, sudden notices demanding 2-3 years of back taxes have sparked protests. Traders in Bengaluru are planning a citywide bandh on July 25, shutting down shops in protest against the retrospective tax demands. The department is now focusing on outreach and ensuring traders are not harassed or misinformed, while urging compliance with existing tax laws.