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Are property taxes buoyant? Evidence from Indian states

Author

Listed:
  • Abhishek Seth

    (Indian Institute of Technology Roorkee)

  • Manish Kumar Singh

    (Indian Institute of Technology Roorkee, xKDR Forum)

  • Diya Uday

    (xKDR Forum)

Abstract

Property tax is the most important source of own revenue for Indian cities, yet it has failed to keep pace with rapid urban economic growth. In this paper, we address this gap in two steps: first, we measure whether property taxes in India are buoyant, that is, whether they rise proportionately with income; and second, we examine whether buoyancy differs systematically across valuation systems - Annual Rental Value (ARV), Unit Area Value (UAV), and Capital Value (CV). Using a balanced panel of 2,470 Urban Local Bodies in 23 states (2018-19 to 2022-23) from the City-Finance portal, we estimate buoyancy via fixed-effects regressions linking property tax demand to nominal GSDP. Our findings suggest modest overall buoyancy (0.96), with ARV outperforming CV and UAV. Robustness checks confirm the pattern, highlighting that valuation implementation quality, not statutory form, drives revenue responsiveness in rapidly urbanizing economies.

Suggested Citation

  • Abhishek Seth & Manish Kumar Singh & Diya Uday, 2025. "Are property taxes buoyant? Evidence from Indian states," Working Papers 42, xKDR.
    • Handle: RePEc:anf:wpaper:42
    as

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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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