The report said low non-tax revenue continued to be a major challenge in the mobilisation of financial resources. Non-tax revenue is collected from user charges in government-run hospitals, irrigation, drinking water, educational institutions, public transport, and electricity supply.
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Low non-tax revenue, especially from user charges and government assets, continues to remain a major challenge in strengthening the State’s fiscal health and sustainable economic growth, according to the Resource Mobilisation Committee (RMC) report.

The committee headed by retired IAS officer K.P. Krishnan submitted the report on Thursday to Chief Minister Siddaramaiah, who also holds the Finance portfolio, recommending reform in the tax structures to broaden the tax base and reduce over-reliance on a few major sources of revenue, such as commercial tax, excise, motor vehicles and stamps and registration.

The report said low non-tax revenue continued to be a major challenge in the mobilisation of financial resources. Non-tax revenue is collected from user charges in government-run hospitals, irrigation, drinking water, educational institutions, public transport, and electricity supply.

Earlier too, the Fiscal Management Review Committee, headed by the Chief Secretary, had recommended remedial measures such as regular revision of user charges to check the slide in the growth of non-tax revenues.

Moderate increase

According to the Medium Term Fiscal Plan (MTFP)-2025, the State’s non-tax revenue increased moderately from ₹13,117 crore in 2023-24 to ₹14,500 crore in 2024-25. The projected non-tax revenue in 2025-26 (Budget estimate) is set at ₹16,500 crore.

In August 2024, the government constituted a committee to explore various resource mobilisation options, including asset monetisation. It said the substantial opportunities in leasing and monetisation are untapped. However, non-tax revenue as a percentage of GSDP and as a percentage of the own tax revenues has stagnated over the last few years, the MTFP said.

The committee noted that Karnataka continued to show robust economic growth, outperforming many States in India. The State’s own tax revenue remained the backbone, forming about 60-70% of total revenue receipts, with significant contributions from commercial taxes, excise duties, and motor vehicle taxes.

The need for better asset data management and systematic surveying of government properties was another major challenge before the State. “The outdated guidance values and inadequate property tax revisions” were another challenge, the report said.

It recommended the introduction of auction-based digital licensing for excise, focusing on transparency and efficiency, and rationalising and increasing user charges in utilities, transitioning to volumetric billing with robust regulatory support and automatic indexation of user charges to inflation.

Asset evaluation

The committee also suggested to the Finance Department to “unlock revenue potential through scientific asset valuation, expanding leasing under public-private partnerships, and monetising urban land assets”. It also recommended the periodic property surveys, and creating an economic policy wing within the Finance Department to monitor non-tax revenues and asset monetisation

The report underscored safeguarding growth-enhancing expenditures on infrastructure, education, and health while improving expenditure efficiency.

It also called for systematic reforms in revenue mobilisation to sustain Karnataka’s fiscal robustness and inclusive growth trajectory.

Published – November 06, 2025 06:55 pm IST