Bengaluru, July 19, 2025:
Prakash Pirgal, President of the Bangalore Wholesale Cloth Merchant Association, expressed gratitude to the National Traders’ Welfare Board (NTWB) for its continued commitment to addressing the concerns of India’s trading community—particularly micro and small traders who play a vital role in the informal economy.
In a public statement, Pirgal praised the NTWB for its initiatives in simplifying compliance frameworks, enhancing financial inclusion, and protecting the interests of traders. However, he flagged an emerging challenge: a growing number of small vendors in Bengaluru and other cities are returning to cash transactions due to fears of regulatory scrutiny, especially involving GST probes linked to UPI and other digital payments.
“These traders were among the first to adopt digital transactions with patriotic enthusiasm during demonetization and the UPI movement,” Pirgal noted. “Unfortunately, fear of tax inquiries is now pushing them back into cash-based dealings.”
To counter this trend and strengthen India’s digital economy, the association has proposed an innovative, future-ready solution:
Proposed Model: Flat Digital Transaction Tax for Micro Traders (Up to ₹5 Crore Turnover)
Key elements include:
Introduction of a flat Digital Transaction Tax (DTT) between 0.3% and 0.5%, automatically deducted at the point of digital receipt.
Exemption from GST, income tax filings, audits, and other compliance burdens for businesses opting into the scheme.
A pilot project aligned with India’s push for the Central Bank Digital Currency (CBDC) to encourage transparency and reduce dependence on cash.
Assured, low-cost revenue collection for the government with minimal enforcement effort.
A system that builds digital trust and promotes voluntary participation from genuine micro enterprises.
Pirgal emphasized that with the RBI’s Digital Rupee pilot progressing, this model could serve as a milestone in building a simplified and inclusive digital trade ecosystem.
He appealed to the NTWB to recommend the proposal to the Ministry of Finance, the GST Council, and the RBI for broader consultation. A pilot in targeted urban and rural markets, he said, could showcase India’s ability to lead the world in trader-centric digital innovation.
“This initiative could bring the vision of ‘Ease of Doing Business’ to life for millions of small traders who are the foundation of our economy,” Pirgal concluded.
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