Wholesalers in the fast-moving consumer goods (FMCG) sector are expressing frustration over new UPI transaction charges that threaten their already slim profits. A payment of ₹30,000 via UPI nets wholesalers a margin of just ₹450, but a GST deduction of ₹120 from that amount leaves them with only ₹330.
Many wholesalers operate on margins as low as 5%. After covering salaries and delivery costs, they barely have any profit left. This new tax structure could push them to abandon digital payments altogether in favor of cash transactions.
“This is a serious issue for us,” said a representative from the Ahmedabad Wholesale Traders Association. “The government claims to promote ‘one nation, one tax,’ yet they’re imposing additional taxes on top of existing ones.”
The current structure means merchants face a double taxation scenario when using UPI: GST applies to the total payment amount, and then an additional 0.4% tax creates further financial burden. For instance, when making a ₹75,000 transaction through UPI, the maximum tax incurred can reach up to ₹3,000.
This has led many traders to voice their concerns during market days, arguing that they can’t sustain operations if these charges remain in place. With digitization efforts expected to boost transparency for tax collection purposes, many fear it will end up driving them back into cash dealings.
- This shift could impact government revenue streams negatively in the long run.
- A trader making daily earnings of around ₹10,000 now faces increased scrutiny due to digital records.