Karnataka Sets ₹1.20 Lakh Cr Commercial Tax Target for FY 2025-26
The Karnataka Commercial Tax Department has received a bold revenue target of ₹1.20 lakh crore for FY 2025-26. Chief Minister Siddaramaiah, also holding the finance portfolio, announced this during a recent departmental review, placing strong emphasis on boosting GST collection and closing tax evasion gaps.
This aligns with the state’s focus on self-reliance and improving fiscal health amid growing developmental needs.
Why This Target Matters
✅ Largest Commercial Tax Goal Yet
Last year (FY 2024-25), Karnataka collected around ₹98,000 crore in commercial taxes. The new ₹1.20 lakh crore target marks a 22% jump, indicating aggressive revenue mobilisation.
✅ Supports Budgetary Expenditure
With welfare schemes, infrastructure development, and education demands increasing, Karnataka’s fiscal roadmap heavily depends on robust GST inflows.
✅ National Context
Karnataka consistently ranks among the top 5 GST contributors in India, alongside Maharashtra, Gujarat, Tamil Nadu, and Uttar Pradesh.
Focus Areas to Meet the ₹1.20 Lakh Cr Target
1. Real-time e-Way Bill & E-invoice Matching
- Integration between e-way bill and GST return systems to detect discrepancies.
- AI-based tools being deployed for invoice-level fraud detection.
2. Expanding GST Base
- Targeting new businesses and service providers under unorganised sectors.
- Special registration drives across high-density commercial zones.
3. Enforcement Drives
- Joint raids with SGST intelligence and anti-evasion units.
- Focus on sectors with known underreporting (e.g., gold, construction, hospitality).
4. ITC (Input Tax Credit) Scrutiny
- Tightening Section 16 compliance to restrict ineligible ITC claims.
- Rule 36(4) enforcement for provisional credit limitation.
Legal Framework and Government Backing
The move is backed by GST provisions under the CGST Act, 2017, and the Karnataka SGST Act, 2017. Additionally:
- The Revenue Department issued strict SOPs for field-level officers.
- GSTN tools like BIFA and ADVAIT are being used for data analytics.
- Rule 86B (cash ledger restriction) and Rule 88C (intimation of mismatch) are being enforced rigorously.
Expert View: Compliance is the New Strategy
“With increased scrutiny and digital monitoring, businesses must prioritise clean documentation and regular GST reconciliation. A robust compliance approach can reduce notices and improve working capital flow.”
— CA Deepak Shetty, GST Consultant, Bengaluru
Table: Karnataka Commercial Tax Performance (Last 3 Years)
| Financial Year | Commercial Tax Revenue | YoY Growth |
|---|---|---|
| 2022-23 | ₹84,000 crore | 14.2% |
| 2023-24 | ₹91,200 crore | 8.6% |
| 2024-25 | ₹98,000 crore | 7.4% |
| 2025-26 (Target) | ₹1.20 lakh crore | +22% |
Source: Karnataka Finance Department Review (May 2025)
What Taxpayers Should Do
- File GSTR-1 and GSTR-3B accurately
- Match invoices with vendors monthly
- Avoid suspicious ITC claims
- Update registration and KYC if business scaled
Related Read on Efiletax:
👉 GST Compliance Checklist for 2025
FAQs
Q1. Who sets the commercial tax target in Karnataka?
The state Finance Department, under the guidance of the Chief Minister, sets yearly targets for the Commercial Tax Department.
Q2. Will this impact small businesses?
Not directly. However, businesses with suspicious filings or cash-heavy operations may face scrutiny.
Q3. Is there any amnesty or scheme to support compliance?
Yes, the GST Amnesty Scheme 2025 is ongoing for past defaulters. Eligible taxpayers can regularise pending returns with reduced penalties.
Summary
Karnataka has set a ₹1.20 lakh crore commercial tax target for FY 2025-26, reflecting a 22% growth goal. CM Siddaramaiah urges stronger GST enforcement, ITC verification, and digital monitoring to boost collections. Businesses must tighten compliance to avoid scrutiny.