Reset tax on transfer of property

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.