If you’re running an online store using Razorpay, Stripe, Shopify, or Instamojo, thinking you’re under the radar — think again.
In 2025, Indian tax authorities have quietly stepped up efforts to monitor digital sellers. They are now matching payment gateway records with GST filings. And the result? A growing number of small business owners are receiving unexpected GST notices.
Here’s why your digital payment trail could trigger tax scrutiny — even if you think you’re too small to matter.
The Core Issue: Mismatch Between Receipts and GST Returns
Let’s say you sell skincare kits via a Shopify storefront and collect payments using Razorpay.
- Your total collections are ₹7.5 lakh in FY 2024–25
- You haven’t registered for GST, thinking you’re well below the ₹20 lakh limit
- Razorpay, however, has already reported your transaction data to GSTN
The GST department is now actively matching:
- Payment gateway transaction reports
- PAN-level income tax filings
- GST registration and return records (if any)
If there’s a mismatch — even a small one — the system flags your PAN, and a notice may follow under Section 61 or 65 of the CGST Act.
What Changed in 2025?
From late 2024 onwards, payment aggregators like Razorpay, Cashfree, Stripe, and PayU were mandated to submit monthly merchant-level transaction reports.
This stems from:
- RBI’s Payment Aggregator Framework
- GSTN’s integration with NPCI and e-commerce reporting APIs
By 2025, this ecosystem is fully operational.
So even if you haven’t registered under GST, your gateway already has — and is reporting your transactions to the tax department.
Real Story: DTC Seller Gets a GST Notice
Megha runs a small home decor brand, collects payments using Stripe on her website, and earns about ₹14.2 lakh a year.
She believed she didn’t need to register for GST as she was below ₹20 lakh.
However, Stripe submitted her monthly payout details to GSTN. When GST officers did a routine reconciliation, they noted:
- No GSTIN was mapped to her PAN
- No LUT was filed for her export transactions
- Several B2C invoices didn’t appear in GSTR-1 returns
In April 2025, she received a notice under Section 61 — asking her to explain why GST was not paid on outward supplies exceeding ₹10 lakh in three quarters.
Megha is now facing demands for:
- GST on total collections (including foreign payments)
- Interest for delayed filing
- Late fee for non-registration
GST is Mandatory Even Without ₹20 Lakh Turnover in These Cases
Under Section 24(ix) of the CGST Act, GST registration becomes compulsory if you’re selling via an e-commerce operator or platform.
Here’s how different scenarios are treated:
| Scenario | GST Required |
|---|---|
| Selling via Razorpay/Stripe/Shopify (any amount) | Yes |
| Exporting services (foreign buyers, no GST) | Yes |
| Providing online courses/SaaS | Yes |
| Selling offline locally under ₹20L | No |
| Freelancing to domestic clients (intra-state) | No |
Even if your total receipts are below ₹20 lakh, using a gateway like Stripe or Razorpay technically makes you an “e-commerce seller”, triggering mandatory GST registration.
What Gateways Are Reporting to Tax Authorities
As part of compliance under RBI and GSTN rules, payment gateways report:
- PAN and business name
- GSTIN (if available)
- Bank account details
- Gross monthly receipts and refunds
- Invoice metadata (if API-linked)
This data is linked with income tax and GST systems. Mismatches between reported income and actual returns will now be automatically flagged for scrutiny.
What You Should Do Now
If you’re running a business or even a small side hustle through Razorpay, Shopify, Instamojo, or Stripe:
- Apply for GST registration (mandatory for online sales)
- File Letter of Undertaking (LUT) if exporting services
- Raise GST-compliant invoices for every payment received
- File GSTR-1 and GSTR-3B every month/quarter (even if NIL)
- Reconcile Razorpay or Stripe payouts with books and GST returns
- Disclose all such receipts in your ITR under correct heads
This will help you stay compliant and avoid any future interest, penalties, or audits.
What If You Already Received a GST Notice?
Don’t panic — here’s how to handle it:
- Respond within 7 working days if issued under Section 61
- Register for GST immediately and request regularization
- File belated returns voluntarily if required
- Consult a tax expert to compute exact liability
- Keep transaction records for at least 6 years
Early compliance and voluntary filing may help reduce penalties and avoid escalation.
Final Thoughts
If you thought payment gateways were just digital pipes for money, 2025 has shown otherwise.
They are now powerful compliance tools for the government — reporting your income even before you do.
So, whether you’re a DTC seller, educator, digital product founder, or service provider, remember this:
In 2025, selling without GST via Razorpay or Shopify is like driving without a license — sooner or later, someone will pull you over.
Stox N Tax 
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