Karnataka is facing a significant revenue shortfall as toll operators, despite collecting ₹3,702.61 crore over five years, have failed to pay ₹232 crore in mandatory stamp duty to the state government. Documents accessed via RTI reveal that toll agreements were executed in Delhi, allowing contractors to bypass local stamp duty under a jurisdictional loophole. The lapse, linked to ambiguous legal interpretation and weak enforcement, is now under review by top state officials aiming to recover lost revenue and plug policy gaps.
Karnataka is staring at a massive stamp duty deficit running into hundreds of crores, even as toll collections on national highways within the state have witnessed a staggering rise. Toll operators, responsible for managing 58 toll plazas across the state, have allegedly sidestepped paying approximately ₹232 crore in stamp duty to the Karnataka government — a statutory requirement under the Karnataka Stamp Act, 1957. Between 2019–20 and 2023–24, toll revenues have surged from ₹1,881.99 crore to ₹4,086.18 crore annually — more than doubling in five years. Yet, according to RTI documents obtained by Belagavi-based activist Prashant Ashok Burge, the stamp duty payments owed by toll contractors remain largely uncollected.
The root of this evasion lies in the agreements between the National Highways Authority of India (NHAI) and private toll operators, which are signed and registered in Delhi. Contractors have claimed that since stamp duty was paid in the national capital, they are not liable to pay it again in Karnataka. However, legal experts and state officials argue this violates the Karnataka Stamp Act, which clearly mandates payment for contracts executed or enforced within the state. The act stipulates stamp duty ranging from 0.5% for agreements of one year to 3% for contracts exceeding 20 years. Despite this, the stamp duty collection remains negligible, leaving a gaping hole in the state’s revenue system.
A high-level meeting chaired by Karnataka’s Chief Secretary in February 2025 addressed the issue. Revenue Minister Krishna Byre Gowda is reportedly working with Chief Minister Siddaramaiah to formulate a recovery mechanism. According to sources, the Commissioner of Registration and Stamps has proposed a reassessment of stamp dues using contract duration, toll revenue data, and operator details directly from the NHAI. But enforcement is tangled in a legal grey zone. Toll agencies cite Section 3 of the Indian Stamp Act, 1899, backed by a 2011 legal opinion from the Attorney General of India, which exempted Build-Operate-Transfer (BOT) agreements from state stamp duties. This ambiguity has been exploited by contractors to resist compliance with Karnataka’s tax laws.
Further complicating the matter, most of the toll fee revenue goes directly to the Consolidated Fund of India, while the state is left to recover its share in the form of stamp duty. The contracts, often short-term (three months to a year), only add to the difficulty of enforcement. The Commissioner of Registration had previously issued demand notices to multiple toll contractors and the NHAI, seeking full or partial payments. Some contractors paid token amounts, but the collections fall drastically short of the estimated ₹232 crore, which officials believe may even cross ₹500 crore upon full audit.
State authorities are now building a case for tighter coordination with the Centre. The Public Works Department has been directed to acquire detailed toll operation records from the Ministry of Road Transport and Highways. Simultaneously, efforts are underway to legally establish that toll collection operations in Karnataka are subject to Article 32(A)(i) of the Karnataka Stamp Act, regardless of where the agreement was signed. As of January 2025, 14 new toll plazas have been added in just three years, including the Bengaluru–Mysuru Expressway — a key revenue-generating corridor. Yet, this growth hasn’t translated into proportional state revenue due to weak enforcement and jurisdictional confusion.
There are 53 private toll agencies operating across Karnataka. Officials say if stamp duty is collected strictly as per contract value, it could significantly boost the state’s financial capacity to fund infrastructure and social development programmes. Meanwhile, questions are being raised about regulatory oversight and accountability. Former Commissioner of Stamps and Registration B.R. Mamatha had initiated early efforts to enforce stamp duty but was met with bureaucratic delays and resistance from stakeholders. The current administration is under pressure to act decisively and close the legal loopholes.
For a state that’s actively investing in highways, metro expansion, and rapid rail projects, such lapses reflect poorly on fiscal management. As Karnataka navigates an era of rapid infrastructure growth, bridging the enforcement gap in stamp duty collections is not just a legal obligation — it’s an economic necessity.
