Homozygous Golden Rice lines developed in the background of Swarna through marker assisted backcross breeding (MABB) using transgenic GR2-R1 event as a donor for the provitamin A trait have high levels of provitamin A (up to 20 ppm) but are dwarf with pale green leaves and drastically reduced panicle size, grain number and yield as compared to the recurrent parent, Swarna. In this study, we carried out detailed morphological, biochemical and molecular characterization of these lines in a quest to identify the probable reasons for their abnormal phenotype. Nucleotide blast analysis with the primer sequences used to amplify the transgene revealed that the integration of transgene disrupted the native OsAux1 gene, which codes for an auxin transmembrane transporter protein. Real time expression analysis of the transgenes (ZmPsy and CrtI) driven by endosperm-specific promoter revealed the leaky expression of the transgene in the vegetative tissues. We propose that the disruption of OsAux1 disturbed the fine balance of plant growth regulators viz., auxins, gibberellic acid and abscisic acid, leading to the abnormalities in the growth and development of the lines homozygous for the transgene. The study demonstrates the conserved roles of OsAux1 gene in rice and Arabidopsis.