Stamp duty and registration fees are an under-exploited pillar of State own-tax revenue. Examine the structural reasons and suggest reforms.

Stamp duty and registration fees (SDR) are taxes on the legal transfer of immovable property. The rates are a State subject under Entry 63 of List II [1]. SDR is one of the four taxes, along with SGST, sales tax and excise, that together make up about 90% of States' own tax collections [2]. Yet design and administrative flaws keep its yield well below potential.

Structural reasons for under-exploitation

• Stale guideline values: States set a minimum "guideline value" for registration, but it lags the market. The CAG found that Karnataka's Central Valuation Committee was late in revising and notifying guidance market values [3]. The gap between declared and actual price is usually paid in undeclared cash, which feeds black money.
• High rates encourage evasion: High rates make under-declaration worth the risk. The Union Budget 2024-25 asked high-duty States to moderate rates [4].
• Weak assessment at the registry: Sub-Registrar offices undervalued documents, through wrong guidance values and misclassified documents, and stamp duty was short-levied as a result [3].
• Uneven administration across States: Collections have improved through digitalisation, but performance varies widely across States [2].
• The tax design itself: A tax charged on each sale discourages people from moving home or moving for work, and it is levied only when a property is sold [5].

Reforms

• Scientific guideline values: Set them by a transparent method, publish them as open data, and revise them every year by a statutory deadline. Give the valuation committee autonomy.
• Phased rate rationalisation: Bring guideline values closer to market prices step by step while cutting rates, so the total tax bill stays bearable. Review the results against registration data each year.
• Technology: Use e-stamping, digitised land records (DILRMP/ULPIN) and analytics that flag undervalued registrations.
• Equity measures: Lower duty on property bought by women, which the Budget linked to urban-development schemes [4].
• Long-term tax mix: Gradually shift towards recurrent property taxes based on regularly updated values, as the OECD recommends [5]. Build in revenue-sharing between States and urban local bodies.

SDR is under-used because of stale valuations, high rates and weak administration. These can be fixed. With values aligned to the market, moderate rates and transparent digital systems, SDR can become a strong source of State revenue autonomy, support cooperative fiscal federalism and help clean up property markets.