MUMBAI: An SBI report has cautioned that aggressive tax enforcement targeting small businesses could undermine the gains of formalisation under the GST. In a research note, the bank cautioned that such measures risk pushing informal players back into the cash economy. “A recent case from Karnataka illustrates this tension, where numerous small traders and shopkeepers in Bengaluru have received disproportionately high tax notices primarily based on digital footprints such as UPI transactions,” the report said.Urging moderation, the report said, “While the intent to capture a more accurate picture of economic activity and reduce tax evasion is commendable, such enforcement must be balanced with sensitivity. The risk is that overly aggressive scrutiny could drive small businesses back into the informal cash-based economy undermining the very purpose of formalisation.” SBI argues that inclusivity must remain a central tenet of GST’s future. “GST has laid the foundation for greater accountability and revenue generation, but its long-term success will depend on ensuring that it empowers all stakeholders, especially small traders, instead of penalising them.”
