Property Taxation in India : Issues Impacting Revenue Performance and Suggestions for Reform
Rapid urbanization in India means cities face a tremendous challenge to finance and deliver theincreasing demand for basic municipal services. When compared to peers in the Organisation forEconomic Co-operation and Development (OECD), India perform...
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| Format: | Working Paper |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/852151587668989296/Property-Taxation-in-India-Issues-Impacting-Revenue-Performance-and-Suggestions-for-Reform http://hdl.handle.net/10986/33655 |
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okr-10986-336552021-05-25T09:36:22Z Property Taxation in India : Issues Impacting Revenue Performance and Suggestions for Reform Awasthi, Rajul Nagarajan, Mohan PROPERTY TAX REVENUE MOBILIZATION TAX REFORM URBANIZATION PUBLIC FINANCE LAND VALUATION LAND REGISTRATION TAX ADMINISTRATION TAXATION TAX POLICY GOVERNANCE Rapid urbanization in India means cities face a tremendous challenge to finance and deliver theincreasing demand for basic municipal services. When compared to peers in the Organisation forEconomic Co-operation and Development (OECD), India performs poorly in generating revenues fromthe urban immovable property tax. The data show that while the average collection from propertytaxes in the OECD group is about 1.1 percent of national gross domestic product, the number forIndia is about 0.2 percent, which is just one-sixth. Most Indian states, including the relatively better performers, collect small amounts compared to OECD countries. Several factors lead to low property tax revenue in India: undervaluation, incomplete registers, policy inadequacy, and ineffective administration. A big challenge for property tax administration is the lack of accurate property tax rolls under the jurisdiction of the urban local bodies (ULBs). Property tax laws are generally seen to provide many exemptions. Undervaluation is rampant. ULBs — especially smaller municipalities and Nagar Palikas — are constrained with the capacities they possess to effectively administer a property tax. Reform would need to undertake a range of activities: updating property tax laws, getting rid of ineffective exemptions, completing property registers, adopting more effective valuation approaches, and strengthening administration. There is merit in preparing a model municipal act to help build a more robust property tax system. A fresh approach to property tax administration is needed to help bridge the resource gap in the revenue raising capacity of ULBs. For small ULBs that lack capacity, property tax (and perhaps other municipal revenue sources as well) could be administered by a centralized body that handles property registers and databases of all ULBs under its remit through a unique information technology platform. The paper suggests a model to support and manage the technical- and policy-related aspects of the property tax: the establishment of a Municipal Revenue Board at the state level. The board is conceptualized to leverage the latest technology to implement the "back office" functions of a typical property tax administration. 2020-04-27T16:00:28Z 2020-04-27T16:00:28Z 2020-04 Working Paper http://documents.worldbank.org/curated/en/852151587668989296/Property-Taxation-in-India-Issues-Impacting-Revenue-Performance-and-Suggestions-for-Reform http://hdl.handle.net/10986/33655 English Governance Discussion Paper;No. 5 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Working Paper South Asia India |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
PROPERTY TAX REVENUE MOBILIZATION TAX REFORM URBANIZATION PUBLIC FINANCE LAND VALUATION LAND REGISTRATION TAX ADMINISTRATION TAXATION TAX POLICY GOVERNANCE |
| spellingShingle |
PROPERTY TAX REVENUE MOBILIZATION TAX REFORM URBANIZATION PUBLIC FINANCE LAND VALUATION LAND REGISTRATION TAX ADMINISTRATION TAXATION TAX POLICY GOVERNANCE Awasthi, Rajul Nagarajan, Mohan Property Taxation in India : Issues Impacting Revenue Performance and Suggestions for Reform |
| geographic_facet |
South Asia India |
| relation |
Governance Discussion Paper;No. 5 |
| description |
Rapid urbanization in India means cities
face a tremendous challenge to finance and deliver
theincreasing demand for basic municipal services. When
compared to peers in the Organisation forEconomic
Co-operation and Development (OECD), India performs poorly
in generating revenues fromthe urban immovable property tax.
The data show that while the average collection from
propertytaxes in the OECD group is about 1.1 percent of
national gross domestic product, the number forIndia is
about 0.2 percent, which is just one-sixth. Most Indian
states, including the relatively better performers, collect
small amounts compared to OECD countries. Several factors
lead to low property tax revenue in India: undervaluation,
incomplete registers, policy inadequacy, and ineffective
administration. A big challenge for property tax
administration is the lack of accurate property tax rolls
under the jurisdiction of the urban local bodies (ULBs).
Property tax laws are generally seen to provide many
exemptions. Undervaluation is rampant. ULBs — especially
smaller municipalities and Nagar Palikas — are constrained
with the capacities they possess to effectively administer a
property tax. Reform would need to undertake a range of
activities: updating property tax laws, getting rid of
ineffective exemptions, completing property registers,
adopting more effective valuation approaches, and
strengthening administration. There is merit in preparing a
model municipal act to help build a more robust property tax
system. A fresh approach to property tax administration is
needed to help bridge the resource gap in the revenue
raising capacity of ULBs. For small ULBs that lack capacity,
property tax (and perhaps other municipal revenue sources as
well) could be administered by a centralized body that
handles property registers and databases of all ULBs under
its remit through a unique information technology platform.
The paper suggests a model to support and manage the
technical- and policy-related aspects of the property tax:
the establishment of a Municipal Revenue Board at the state
level. The board is conceptualized to leverage the latest
technology to implement the "back office"
functions of a typical property tax administration. |
| format |
Working Paper |
| author |
Awasthi, Rajul Nagarajan, Mohan |
| author_facet |
Awasthi, Rajul Nagarajan, Mohan |
| author_sort |
Awasthi, Rajul |
| title |
Property Taxation in India : Issues Impacting Revenue Performance and Suggestions for Reform |
| title_short |
Property Taxation in India : Issues Impacting Revenue Performance and Suggestions for Reform |
| title_full |
Property Taxation in India : Issues Impacting Revenue Performance and Suggestions for Reform |
| title_fullStr |
Property Taxation in India : Issues Impacting Revenue Performance and Suggestions for Reform |
| title_full_unstemmed |
Property Taxation in India : Issues Impacting Revenue Performance and Suggestions for Reform |
| title_sort |
property taxation in india : issues impacting revenue performance and suggestions for reform |
| publisher |
World Bank, Washington, DC |
| publishDate |
2020 |
| url |
http://documents.worldbank.org/curated/en/852151587668989296/Property-Taxation-in-India-Issues-Impacting-Revenue-Performance-and-Suggestions-for-Reform http://hdl.handle.net/10986/33655 |
| _version_ |
1764479231628148736 |