Karnataka has emerged as the second-largest contributor to direct tax collections in the country after Mumbai region, with net collections from the state already close to Rs 1.25 lakh crore, according to Vidisha Kalra, Principal Chief Commissioner of Income Tax (Karnataka and Goa Region).
Speaking at a conference on the new Income Tax Act, 2025, organised by Bangalore Chamber of Industry and Commerce (BCIC) in Bengaluru, Kalra attributed Karnataka’s strong tax collections to robust economic activity, greater self-compliance, sectoral outreach, digital initiatives and improved guidance from tax professionals and industry bodies.
She said technology-driven, faceless and seamless systems had improved transparency and reduced subjective discretion, while non-intrusive tax administration was helping strengthen voluntary compliance.
“A fair, predictable and transparent tax system is the foundation of a confident business community,” Kalra said, adding that a simpler and more transparent tax law could empower taxpayers and encourage compliance.
1.32 crore updated returns generate Rs 16,083 crore
Pallavi Agarwal, member, Central Board of Direct Taxes (CBDT), said more than 1.32 crore updated returns had been filed over the last four years, resulting in Rs 16,083 crore in additional tax payments under department’s NUDGE campaign.
For Assessment Year 2026-27, more than 97 percent of ITR-1 and over 95 percent of ITR-2 returns were filed under the new tax regime. The department also added 49 lakh first-time filers by July 31, 2026.
304 taxpayer outreach programmes
The Income Tax Department has conducted 304 outreach programmes across India since April 2026 to familiarise taxpayers, professionals and other stakeholders with the new Income Tax Act, Rules and redesigned tax forms.
The programmes have been conducted in English, Hindi and regional languages.
Agarwal said the new tax framework was aimed at reducing the compliance burden, providing greater clarity and certainty, and making tax administration more citizen-centric and technology-driven.
2.54 crore returns processed within one day
Technology-led tax administration has also improved processing efficiency. Of the returns filed up to August 31, 2026, around 2.54 crore, or 32.48 percent, were processed within one day of filing. Refunds were issued in respect of around 65 lakh returns.
The department now interfaces with around eight crore taxpayers and collects nearly 600 crore transaction details through mechanisms including TDS, the Statement of Financial Transactions and the Annual Information Statement.
Its AI-enabled virtual assistant, Kar Sathi, has recorded 54.83 lakh sessions on queries relating to the new Act, Rules and forms.
The department has also redesigned tax forms to make them more user-friendly, standardised, interactive and pre-filled, with pre-filled information now covering 12 data categories across ITR forms.
The conference discussed the new tax law and rules, undisclosed foreign assets, Black Money Act compliance, transfer pricing, thin capitalisation, international taxation and Double Taxation Avoidance Agreements.
