BENGALURU: A comprehensive audit has uncovered revenue leakages in Karnataka’s stamp duty and registration system, alongside earlier flagged deficiencies in the excise and transport departments, pointing to procedural lapses and weak enforcement mechanisms across key revenue-generating sectors.
The audit revealed that misclassification and improper execution of legal instruments — including Powers of Attorney, Agreements of Sale, Release Deeds and Mortgage Deeds — led to substantial short-levy of stamp duty and registration fees. Undervaluation of properties, deviation from prescribed guidance values, and suppression of key transaction details, particularly in Joint Development Agreements (JDAs), further compounded the revenue loss. Collectively, these lapses resulted in collection shortfall of Rs 114.76 crore.
The audit recommended a series of corrective measures, including mandatory detailed scrutiny of documents at Sub-Registrar Offices (SROs), strengthening the internal audit wing to track high-value transactions, and greater reliance on automation to minimise human role. It also called for the revamp of Kaveri software system to flag undervaluation, detect multiple transactions involving the same property, and ensure that JDAs lacking key valuation parameters are subject to closer review. Integration of land use and planning data from other departments was also suggested to enable real-time valuation and standardisation.
These findings come on the back of earlier audit observations highlighting lapses in the Excise department. Under the Karnataka Excise Duties and Fees Rules, 1968, excise duty and additional excise duty (AED) are levied on liquor based on declared prices approved by the Excise commissioner. The distribution of Indian Made Liquor is routed through the state beverages corporation.
An audit found that delays in updating revised declared prices in the KSBCL system led to AED being levied at lower rates for 2 to 10 days during 2022-23, resulting in avoidable revenue loss. As tax is ultimately borne by consumers and the stock had already been sold, recovery of the differential amount was deemed impractical. The government has since initiated steps to recover Rs 58.13 lakh and indicated that a software upgrade would cut the delays.
In a separate review of Regional Transport Offices (RTOs), the audit flagged widespread deficiencies in vehicle registration, tax administration and enforcement. While the rollout of Automated Driving Testing Tracks was noted as a positive step, their limited coverage meant that manual testing continued in many RTOs.
Irregularities were observed in vehicle registration processes, including failure to convert temporary registrations into permanent ones and non-renewal after the statutory 15-year period. Infrastructure for vehicle fitness testing was found to be grossly inadequate, with only three centres operational as of September 2024 and none certified as Automated Testing Stations under central norms.