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Determinants of Stamp Duty Revenue in Indian States

Author

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  • Vivekananda Mukherjee

    (Vivekananda Mukherjee, Department of Economics, Jadavpur University, Kolkata, India. E-mail: mukherjeevivek@homail.com)

Abstract

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

Suggested Citation

  • Vivekananda Mukherjee, 2013. "Determinants of Stamp Duty Revenue in Indian States," South Asian Journal of Macroeconomics and Public Finance, , vol. 2(1), pages 33-58, June.
    • Handle: RePEc:sae:smppub:v:2:y:2013:i:1:p:33-58
    DOI: 10.1177/2277978713482202
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    References listed on IDEAS

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    1. Alm, James & Annez, Patricia & Modi, Arbind, 2004. "Stamp duties in Indian states - a case for reform," Policy Research Working Paper Series 3413, The World Bank.
    2. Ben Dachis & Gilles Duranton & Matthew A. Turner, 2012. "The effects of land transfer taxes on real estate markets: evidence from a natural experiment in Toronto," Journal of Economic Geography, Oxford University Press, vol. 12(2), pages 327-354, March.
    3. Benjamin, John D & Coulson, N Edward & Yang, Shiawee X, 1993. "Real Estate Transfer Taxes and Property Values: The Philadelphia Story," The Journal of Real Estate Finance and Economics, Springer, vol. 7(2), pages 151-157, September.
    4. Brueckner, Jan K., 2011. "Lectures on Urban Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262016362, April.
    5. Brückner, Markus, 2012. "An instrumental variables approach to estimating tax revenue elasticities: Evidence from Sub-Saharan Africa," Journal of Development Economics, Elsevier, vol. 98(2), pages 220-227.
    6. Ahmad, Ehtisham & Poddar, Satya, 2009. "GST reforms and intergovernmental considerations in India," LSE Research Online Documents on Economics 38346, London School of Economics and Political Science, LSE Library.
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    Cited by:

    1. Nayudu, A. Sri Hari, 2019. "Tax Revenue Efficiency of Indian States: The case of Stamp Duty and Registration Fees," Working Papers 19/278, National Institute of Public Finance and Policy.

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    More about this item

    Keywords

    Housing market; stamp duty; vertical externality; administrative reforms; panel data regression;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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