BENGALURU, 26 OCT

Karnataka has surpassed Delhi to become the second-largest contributor to direct tax collections in the country, according to a report released by State Bank of India on Friday.

In the fiscal year 2023-24, Karnataka contributed 11.9% of the total direct tax revenue, ranking second after Maharashtra, which accounted for 38.9%. Delhi followed in third place with 10.4%. Tamil Nadu and Gujarat ranked fourth and fifth, contributing 6.5% and 4.8%, respectively, according to the SBI Research report. Together, these top five states make up over 70% of the direct tax revenue collected by the Central government.

Direct taxes comprise income and corporate tax, while indirect taxes include GST, customs and duties, among others. It is the first time in seven years, Karnataka overtook Delhi in both income and corporate tax contributions.

“India’s progressive tax regime has increased direct tax contributions to 56.7% of total tax revenue in 2023-24, the highest in 14 years. Since FY 2020-21, personal income tax collections have outpaced corporate income tax, growing by 6% compared to 3% for corporate tax,” the report said.

The report also mentioned, “Income disparity for earners up to Rs 5 lakh has decreased by 74.2%, demonstrating that government initiatives are effectively raising incomes among lower-income groups.”

Meanwhile, earlier this month, Deputy Chief Minister DK Shivakumar accused the Central government of underfunding Karnataka in tax devolution. -Salar News