State ranked third in tax collection

Karnataka has emerged as the third highest income tax collecting state in the the country – after Mumbai and Delhi – in the last two decades.

Mumbai and Delhi occupy the first and the second place, respectively. From meagre collections of Rs 1,000 crore in 1994 in Karnataka, the department has earned Rs 59,683 crore in 2013-14 in the State, thanks to the phenomenal growth in the service sector.

In 2013-14, Mumbai, the country’s commercial capital, registered a tax collection of Rs 2,00,631 crore, while Capital Delhi stood second at Rs 89,492 crore.

Karnataka has been maintaining the top position in South India since the last five years, ahead of Tamil Nadu, Andhra Pradesh, Kerala, Goa and Puducherry.

Income Tax officials, however, term the increase in tax collection in Bangalore as rather gradual. Attributing the State’s high tax collections due to the tremendous growth of the service sector, Income Tax Commissioner M Thirumala Kumar told Deccan Herald that the efforts made by the department had been bearing fruits, ensuring Karnataka was way ahead of other South Indian states.

Officials said the country had overall registered growth in terms of tax collection, more importantly on the direct taxes front. In 1991, out of the total tax collection, only 14 per cent comprised direct taxes. However, for the year 2013-14, out of the total tax collection, 54 per cent is direct taxes.

While overall tax collection has been scaling up, the cost of collection in the country is still the lowest in the world.

In India, the cost of tax collection (overall expenditures incurred to go through the process of tax collection) is the lowest at 0.59 per cent, while it is 1.17 per cent in Canada, 1.58 per cent in Japan and 1.02 per cent in Singapore, as per the statistics obtained for 2012-13.