Reset tax on transfer of property

Economic wisdom often says that a higher tax rate yields the same revenue as a lower one, as a higher rate encourages tax evasion, while a lower tax rate encourages tax compliance. | Photo Credit: Getty Images/istockphoto Stamp duty and Registration Fees (SDR) are major components of States’ own-source tax revenue in India. In 2024-25, 11.7% of States’ own tax revenue was collected through SDR. Tamil Nadu is no exception, collecting 11.3% of its own tax revenue through this source. However, it has not harnessed this source to the same extent as Maharashtra and Karnataka, which collected 14.8% and 12.3% of their own tax revenues through SDRs, respectively. The Tamil Nadu government has recently constituted the Revenue Augmentation Committee to strengthen own-tax and non-tax revenues. The tax policies in other States should inform the Committee’s tax reforms.SDRs are taxes imposed on the legal transfer of ownership of immovable property. Hence, they increase the property’s total effective cost. While SDRs are levied on the property’s value, the irony is that the property value is a function of the SDR. To resolve this, the State government fixes a guideline value and restricts registration of legal transfers below it. In practice, the actual value of the property being transferred is far above the guideline value. This can be addressed only through a scientific process of fixing guideline values and revising them periodically. At the same time, the SDR rate should encourage parties to declare the true value of the property being transferred. Published - November 12, 2026 12:36 am IST