Determinants of Stamp Duty Revenue in Indian States

This article exploits a panel data set from 18 Indian states over the period between 1993–1994 and 2009–2010 and identifies a set of parameters significantly affecting stamp duty revenue collection in the states. It turns out that among all the parameters, the per capita income of the state has the most significant impact on stamp duty revenue collection. The administrative reforms at the states’ stamp duty and registration departments, like introduction of franking machines and e-governance, have a positive impact on stamp duty revenue collection as well. It is found that the central government’s choice of capital gains tax rate creates an externality on stamp duty revenue collection in the states. The results are used to critically assess the policy of lowering of stamp duty rates and introducing administrative reforms as part of the Urban Reform Incentive Fund implemented by the central government since 2003–2004 (later subsumed under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM)).JEL Classification: H21, H71, H77, C33