CHAPTER-VI

INTER – STATE COMPARISON OF REVENUE FROM

PROPERTY AND CAPITAL TRANSACTIONS

In this chapter, we discuss the growth of total revenue from taxes

on property and capital transactions. We also examine the growth of

revenues from land tax, stamp and registration fees and the inter-state

differentials in the revenue per head of population from these sources.

A. TAXES ON PROPERTY

The relative importance of taxes on property in modern fiscal

systems has comedown because of the development of the taxes on income

and commodity taxes. But the property tax still remains the largest and most

important source of revenue in several countries e.g. the United Kingdom,

Australia, U.S.A. and Canada.1

Property taxes may be imposed on pieces of property (payable by

the owner) and thus be of impersonal, in rem–type or they may be imposed on

the combined property holdings of a person, or on his net worth, thus being in

the nature of a personal tax.2

In general, revenue from property and capital transactions includes

(i) Land Revenue.

(ii) Stamp duty and Registration fees.

The Kerala Taxation Enquiry Committee felt that property tax must

be given prominence than commodity taxation in order to collect more revenue

and reduce inflationary pressure.3

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The property tax is based on the annual rental value or capital

value of the property. It is usually levied at the some rate for different rental

values.

B. GROWTH TREND OF REVENUE FROM TAXES ON PROPERTY AND CAPITAL TRANSACTIONS

Taxes on property and capital transactions is an important source

of revenue to the states.

Table VI–1 reveals that the total and per capita revenues from

taxes on property and capital transactions have increased at current prices in

all the states between 1985 – 86 and 2005 – 06. As seen from Table VI–2, the

total and per capita revenues from property tax went up in all the states in real

terms also. In West Bengal, the total property tax receipts have swelled up

from Rs.185crs in 1985 – 86 to Rs.2095crs in 2005 – 06. In Tamil Nadu, the

total revenue from this source has increased by nearly 20 times in 2005 – 06

over 1985 -86. Both total and per capita property tax receipts increased in all

the states. But not in the uniform rate. The property tax revenue was higher in

the states of Maharashtra, Tamil Nadu, Uttar Pradesh and West Bengal and it

was lower in Assam, Bihar and Orissa.

The relative positions of states Haryana, Karnataka, Kerala,

Maharashtra, Orissa, Punjab and Rajasthan improved and there was no

improvement in Andhra Pradesh, Assam, Bihar, Gujarat, Madhya Pradesh,

TamilNadu, Uttar Pradesh and West Bengal regarding the property tax

receipts.

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178

179

The contribution of property tax revenue to total revenue has risen

in most of the states (See Appendix Table A-37). However, there is no

uniform trend. Its share in total revenue was top most in West Bengal while it

was lowest in Assam.

Further, the contribution of property tax revenue to total tax revenue

has also risen in most of the states. Its share was nearly 5% and above in all

the states except in Assam. The contribution was not satisfactory in Assam.

The rate of growth of total property tax revenue was highest in

Maharashtra and lowest in Bihar where as the rate of growth of per capita

property tax revenue was highest in Karnataka and lowest in Bihar.

INTER–STATE DISPARITY IN PERCAPITA REVENUE FROM TAXES ON PROPERTY AND CAPITAL TRANSACTIONS

It is known from the Table VI – 3 that the ratio between the lowest

and highest per capita property tax revenue is widening. In 1985 – 86, the

ratio was 1:6.02. It means that West Bengal’s per capita property tax revenue

was nearly 6 times higher than that of Assam. In 2005 – 06, the ratio went up

to 1:11.42 indicating the same tendency between Punjab and Assam.

It is also seen that the all state average of per capita property tax

revenue has grown year by year. In General, the developed states stand

above the all state average while the backward states lie below the all state

average. The relative and absolute variations in the levels of per capita

property tax revenue of the states are larger and going up.

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TABLE VI-3

I. MEASURES OF INTER-STATE DISPARITY IN PER CAPITA REVENUE FROM TAXES ON PROPERTY AND CAPITAL TRANSACTIONS

Year Ratio between lowest and

highest per capita revenue

Mean (in Rs.)

Standard Deviation

Co-efficient of Variation

1985-86 1:6.02 18.84 7.63 40.52

1986-87 1:6.93 21.11 8.81 41.75

1987-88 1:5.45 24.94 9.69 38.86

1988-89 1:8.75 30.57 13.99 45.76

1989-90 1:7.72 36.93 16.54 44.81

1990-91 1:6.25 38.94 14.93 38.34

1991-92 1:3.52 44.98 16.12 35.84

1992-93 1:3.41 48.54 17.21 35.45

1993-94 1:3.55 57.07 20.40 35.74

1994-95 1:5.86 77.54 37.44 48.29

1995-96 1:6.21 89.08 45.53 51.11

1996-97 1:6.41 88.52 41.67 47.07

1997-98 1:6.10 95.90 48.76 50.84

1998-99 1:4.85 98.90 48.64 49.18

1999-00 1:5.68 106.73 50.31 47.14

2000-01 1:6.28 118.72 59.77 50.35

2001-02 1:7.01 131.78 69.27 52.57

2002-03 1:7.80 150.13 77.90 51.89

2003-04 1:8.13 177.26 95.16 53.69

2004-05 1:9.28 212.25 115.43 54.38

2005-06 1:11.42 284.51 182.21 64.04

II. Rank correlation co-efficient between 1985-86 per capita revenue levels and the

absolute variation in per capita revenue levels.

1985-86 and 1990-91 +0.65

1985-86 and 1995-96 +0.75

1985-86 and 2000-01 +0.7428

1985-86 and 2005-06 +0.7

III. Rank correlation co-efficient between 1985-86 per capita revenue levels and the

percentage variation in per capita revenue levels.

1985-86 and 1990-91 -0.2785

1985-86 and 1995-96 +0.2071

1985-86 and 2000-01 -0.075

1985-86 and 2005-06 +0.3607 Source : Table VI-1-Computed by us.

181

INCOME ELASTICITY OF PROPERTY TAX

TABLE VI-4

INCOME ELASTICITY OF PROPERTY TAX

STATES/YEAR 1985-86 - 2005-06

1.Andhra Pradesh 1.48

2.Assam 1.63

3.Bihar 1.39

4.Gujarat 1.59

5.Haryana 2.19

6.Karnataka 2.75

7.Kerala 1.45

8.Madhya Pradesh 2.04

9.Maharashtra 3.11

10.Orissa 0.81

11.Punjab 2.94

12.Rajasthan 1.77

13.Tamil Nadu 1.45

14.Uttar Pradesh 1.87

15.West Bengal 0.92

Source: Tables VI-1 & A-52-Computed by us.

As revealed by Table VI – 4 the income elasticity of property tax

revenue is less than one in Orissa and West Bengal only. In the other states,

the income elasticity is greater than one implying that in these states an

increase in the state income leads to more than one percent increase in

property tax revenue. This means that in these states this tax system is

responsive to changes in state income. The income elasticity is very high in

Maharashtra.

C. TAXES ON LAND

In India, from time immemorial, Land tax or Land revenue has been

an important source of income to the states. Thus, it is the oldest of the state

182

taxes. There has been considerable variation among the states in the method

of land revenue settlement as well as in calculation of the tax due, since the

tax has been imposed.

In India, the system of sharing a part of the produce from the land

with the king or the Chief of the community had been in existence from time

immemorial. The King’s share was one sixth of the gross produce and the tax

was paid in kind. The assessment of the King’s share in monetary terms was

the first important development that took place in modern times. It was

Emperor Akbar who reformed the system of land revenue assessment and

laid the foundation of a land revenue policy, which continued with suitable

modifications, up to the present times.4

In a few princely states the British System was adopted, but in the

other princely states, there was no regular system of land revenue. After

Independence the states Punjab, Maharashtra, Madras and Assam belonged

to one category in which practically all the lands had been surveyed and

measured and land revenue was settled on some definite principles. On the

other hand in states like Rajasthan and parts of Gujarat there were large

portions of unsurved and unsettled lands. In between these, there were the

states like Uttar Pradesh and Madhya Pradesh where there was regular

settlement of lands. In West Bengal, Bihar and Orissa, there was no

organised land revenue system.

Prof. Remesh Dutt in his “The Economic History of India” Vol.–I

(Under Early British Rule 1757 – 1837) wrote “Agriculture is now virtually the

only remaining source of national wealth in India, and four fifths of the Indian

183

people depend on Agriculture. But the land tax levied by the British is not

excessive, but, what is worse, it is fluctuating and uncertain in many

provinces. In England, the Land Tax was between one shilling and four

shillings in the pound i.e., between 5 and 20 percent of the rental during a

hundred years before 1798, when it was made perpetual and redeemable by

William pitt. In Bengal, the Land Tax was fixed at over 90 percent of the rental,

and in Northern India at over 80 percent of the rental between 1793 and 1882.

It is true that the British Government only followed the precedent of the

previous Mohammedan rulers who also claimed an enormous land tax. In

Madras,5 the Land Tax first imposed by the East India Company was one half

of the gross produce of the Land. In Bombay, the land revenue of the territory

conquered from the marattas in 1817 was £ 8,00,000 in the year of the

conquest; it was raised to £ 15,00,000 within a few years of British rule and it

was continuously raised since.

In calculating the land revenue payable to government, different

states adopted different methods. The Taxation Enquiry Commission

classified the methods in the following categories:

(i) Net Asset or economic rents

(ii) Net produce or annual value

(iii) Rental value

(iv) Capital value

(v) Gross produce6

Of these Tamil Nadu adopts Net Produce or Annual value method

for assessment of land revenue. The Net produce or the Annual value is

184

derived by deducting the cultivation expenses and certain allowances for bad

seasons from the gross value of the produce.

GROWTH TREND OF REVENUE FROM LAND REVENUE

Land revenue occupied a pride of place in the tax structure of

almost all the states.

It can be seen from the Table VI–5 that the total and per capita land

revenue went up in all the states. Andhra Pradesh earned an income of

Rs.21crs. In 1985 -86 and it became Rs.69crs in 2005 – 06, (i.e.) it increased

nearly by 3 times during the period of study. West Bengal derived more

revenue from this head as compared to other states. The main reasons were

increasing productivity of land, rise in prices of agricultural products, better

monsoon and best irrigation facilities. Further the government did not grant

any concession to the rich farmers. The total and per capita land revenue was

lower in Assam, Haryana, Punjab and Kerala. In Kerala and Haryana the

erosion of land revenue was caused by abolition of surcharge on land

revenue. In Rajasthan, the receipts from land revenue did not register a

sizable increase due to the failure of monsoon and lack of irrigation facilities.

“Frequent occurrences of famine or scarcity conditions have always been

responsible for the backwardness of this state”.

There was an improvement in the relative position of the states like

Assam, Gujarat, Karnataka, Kerala, Punjab and TamilNadu. Regarding

Maharashtra and West Bangal, the relative positions of the states were more

or less the same during the period of our analysis.

185

186

187

As shown by Table VI – 6, in real terms also the total and per

capita land revenue had gone up in Assam, Gujarat, Karnataka, Kerala,

MadhyaPradesh, Maharashtra, Orissa, Punjab, Rajasthan, UttarPradesh and

WestBengal during the period under our review. In Andhra Pradesh and

Bihar, total and per capita land revenues have decreased from 1985 – 86 level

in 2005 – 06. In Haryana and Tamil Nadu, the total and per capita land

revenues remained almost constant. In real terms also, West Bengal derived

more revenue from land tax.

The decline in the relative importance of land revenue in total

revenue and tax revenue in all the states is clearly visible. The contribution of

land revenue to total revenue (See Appendix Table A-40) and tax revenue

came down in most of the states. It was a little higher in West Bengal and less

in other states. Due to diversification of their economy land revenue has lost

its importance in all the states.

The growth rates of total and per capita land revenue were at

maximum in Gujarat and minimum in Bihar.

Land Revenue as a tax has not been properly assessed. It does

not fall equally on different size of holdings and is regressive in its effects. It is

unproductive in nature. It is inflexible in character and meager in its

contribution to the total tax revenue of the states. Land revenue administration

machinery is more or less of uniform pattern in all the states.

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Figure VI-1

Growth of Per capita Revenue from Land Tax at Current Prices

0

20

40

60

80

100

120

1985-86 1990-91 1995-96 2000-01 2005-06

Years

Per

cap

ita

Reven

ue

in

Ru

pees

1.Andhra pradesh 2.Assam 3.Bihar 4.Gujarat

5.Haryana 6.Karnataka 7.Kerala 8.Madhya pradesh

9.Maharashtra 10.Orissa 11.Punjab 12.Rajasthan

13.Tamil Nadu 14.Uttar Pradesh 15.West Bengal

Source: Table VI – 5

189

INTER – STATE VARIATIONS ON LAND REVENUE

TABLE VI-7

I. MEASURES OF INTER-STATE DISPARITY IN PER CAPITA LAND

REVENUE

Year

Ratio between lowest and highest per capita

revenue

Mean (in Rs.)

Standard Deviation

Co-efficient of Variation

1985-86 1:11.78 4.88 4.86 99.62

1986-87 1:14.84 4.99 5.82 116.47

1987-88 1:80.51 5.80 7.28 125.48

1988-89 1:87.70 7.52 10.64 141.53

1989-90 1:90.36 8.75 11.72 133.91

1990-91 1:53.36 8.00 9.28 116.01

1991-92 1:59.32 8.08 10.09 124.75

1992-93 1:30.04 7.65 6.34 82.95

1993-94 1:39.87 9.63 9.88 102.61

1994-95 1:105.99 12.86 20.34 158.24

1995-96 1:139.50 14.29 25.61 179.20

1996-97 1:57.18 11.71 15.35 131.09

1997-98 1:32.89 12.29 14.15 115.18

1998-99 1:33.70 12.79 12.09 94.51

1999-00 1:12.98 11.87 7.68 64.69

2000-01 1:21.64 14.53 15.12 104.12

2001-02 1:34.18 16.58 20.93 126.25

2002-03 1:60.23 16.54 19.82 119.86

2003-04 1:43.35 20.16 28.44 141.06

2004-05 1:36.78 23.15 32.37 139.80

2005-06 1:19.42 24.70 27.59 111.70

II. Rank correlation co-efficient between 1985-86 per capita revenue levels and the

absolute variation in per capita revenue levels.

1985-86 and 1990-91 +0.3928

1985-86 and 1995-96 +0.3

1985-86 and 2000-01 +0.2714

1985-86 and 2005-06 +0.3285

III. Rank correlation co-efficient between 1985-86 per capita revenue levels and the

percentage variation in per capita revenue levels.

1985-86 and 1990-91 +0.1464

1985-86 and 1995-96 +0.05

1985-86 and 2000-01 -0.1857

1985-86 and 2005-06 -0.1428 Source : Table VI-5-Computed by us.

190

As seen from Table VI – 7, the difference between the lowest and

highest per capita land revenue was 1:11.78 in 1985 – 86. It indicates that

West Bengal’s per capita land revenue was nearly 12 times higher than that of

Punjab. The ratio between the lowest and highest per capita land revenue

was very high in 1995 – 96. The ratio was 1:19.42 in 2005 – 06. This ratio

fluctuated heavily.

Figure VI-2

Inter-State Disparity in Per capita Land Revenue

0

20

40

60

80

100

120

140

160

180

200

19

85

-86

19

90

-91

19

95

-96

20

00

-01

20

05

-06

Years

Co

-eff

icie

nt

of

Vari

ati

on

Source: Table VI-7

The all state average increased year by year. The states Bihar,

Gujarat, Madhya Pradesh, Maharashtra, Orissa, Rajasthan and West Bengal

stood above the all state average and the other states stayed below the all

state average.

191

The disparity in per capita land revenue is very high and it exhibits

a diverging trend. States with higher per capita levels continue to grow their

revenue faster than the other states. So the disparity is enlarging.

TAX – INCOME RATIO

Table VI–8 indicates the part of our income that goes to the

government by way of Land taxes. The tax – income ratio has almost

decreased in all the states. The ratio was relatively higher in West Bengal in

all the years and it was very low in Andhra Pradesh, Haryana and Punjab.

From our income of Rs.1 less than one paise goes to the government through

land revenue.

Now the land tax is used for confirming the ownership of the land

and not for revenue purposes.

192

193

D.STAMP DUTY AND REGISTRATION FEES

One of the important sources of revenue for the states is “Stamps

and Registration”. Registration fees are collected for registering documents.

Stamp duties are used both as a method of collection suitable for taxes and as

a particular form of taxation. The term itself usually covers the duties levied

on various deeds and documents executed as proof or record of certain legal

transactions.7 Stamp duties are popular with government, but are of limited

appeal to economists; Stamp Duty and Registration fees are convenient to

collect and supervise, but many of them are not meticulously related to the

ability to pay. It is hardly possible to generalize about the incidence of these

duties. They are in general used in many countries.

In India, Stamp duties are divided as judicial and non-judicial. The

former is levied under the Court Fees Act, 1970 and represent fees payable by

person having business in law courts and public offices. The duties are known

as court fees. Non-judicial stamp duties are regulated by the Indian Stamp

Duty Act, 1899, as amended from time to time by the government of India and

state Governments. The Stamp duty on bills of exchange, cheques, letters of

credit, promissory notes, receipts etc., is with in the legislative competence of

the centre, but proceeds are collected and appropriated by the state. Stamp

duties on other items including transactions on immovable property are levied

by states. Some stamp duties are fixed and others are on advalorem basis.

GROWTH TREND OF REVENUE FROM STAMP DUTY AND

REGISTRATION FEES

The growth of revenue from stamp duty and Registration fees at

current prices is revealed by the Table VI - 9.

194

The total and per capita receipts from stamps and registration fees

show a rising trend. In Andhra Pradesh, the total revenue rose from Rs.69crs

in 1985 – 86 to Rs.2013crs in 2005 – 06 while the per capita revenue rose

from Rs.12.00 in 1985 – 86 to Rs.245.76 in 2005 – 06. Regarding per capita

receipts the top most place of pride was held by Punjab in 1985 – 86, by

Haryana in 1990 – 91 by Maharasthra from 1995 – 96 to 2000 – 2001 and

again by Punjab in 2005 – 06. The total and per capita receipts were lower in

Assam than in other states during the 21 years under our consideration. The

factors responsible for increasing the revenue are growing economic activity,

the increasing level of prices, transactions in land and consequent of land

reforms in these states. The rates at which the revenue increases differ from

state to state.

Table VI–10 indicates that at constant 1980 – 81 prices, the

absolute level of the revenue from Stamp Duty and Registration fees had gone

up in all the states. The revenue per head of population has also moved up in

all states.

The revenue contribution by Stamp Duty and Registration fees in total

revenue maintains a steady trend of increase during the period of our study

(See Appendix Table A-43). Its contribution to total revenue and tax revenue

were very high in Tamil Nadu and Punjab as compared to other states and its

contribution was very low in Assam. The share of revenue from stamps and

registration fees to all the states total revenue and tax revenue continuously

increased. And therefore, it remains as the third largest source of revenue to

the state governments.

195

196

197

There was progress in the relative rankings of the states of Andhra

Pradesh, Karnataka, Maharashtra, Orissa and Rajasthan and there was no

progress in the position of other states.

The rate of growth of total and per capita revenues from stamp duty

was very high in Maharashtra and it was very low in Bihar.

198

Figure VI-3

Growth of Per capita Revenue from Stamps and Registration Fees at

Current Prices

0

100

200

300

400

500

600

700

1985-86 1990-91 1995-96 2000-01 2005-06

Years

Per

ca

pit

a R

eve

nu

e i

n R

up

ee

s

1.Andhra pradesh 2.Assam 3.Bihar 4.Gujarat

5.Haryana 6.Karnataka 7.Kerala 8.Madhya pradesh

9.Maharashtra 10.Orissa 11.Punjab 12.Rajasthan

13.Tamil Nadu 14.Uttar Pradesh 15.West Bengal

Source: Table VI-9

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INTER–STATE COMPARISON PER CAPITA REVENUE FROM STAMP DUTY AND REGISTRATION FEES

TABLE VI-11

I. MEASURES OF INTER-STATE DISPARITY IN PER CAPITA REVENUE FROM STAMP DUTY AND REGISTRATION FEES

Year Ratio between lowest and

highest per capita revenue

Mean (in Rs.)

Standard Deviation

Co-efficient of Variation

1985-86 1:9.59 13.85 7.32 52.88

1986-87 1:11.87 15.98 8.75 54.73

1987-88 1:7.25 18.93 9.62 50.81

1988-89 1:13.26 22.71 12.79 56.33

1989-90 1:12.82 27.87 16.62 59.63

1990-91 1:14.29 30.61 16.71 54.59

1991-92 1:11.76 36.54 17.42 47.66

1992-93 1:11.72 40.43 19.90 49.22

1993-94 1:11.96 46.66 23.91 51.24

1994-95 1:17.21 63.98 37.09 57.97

1995-96 1:16.35 74.13 44.46 59.98

1996-97 1:16.75 75.75 43.07 56.86

1997-98 1:19.02 83.93 50.76 60.48

1998-99 1:16.09 87.88 51.38 58.46

1999-00 1:15.49 93.81 51.93 55.35

2000-01 1:15.67 102.97 61.44 59.67

2001-02 1:15.95 113.96 70.05 61.47

2002-03 1:15.41 132.41 77.62 58.62

2003-04 1:14.70 155.98 95.85 61.45

2004-05 1:15.41 188.04 115.38 61.36

2005-06 1:21.16 258.48 184.68 71.45

II. Rank correlation co-efficient between 1985-86 per capita revenue levels and the absolute variation in per capita revenue levels.

1985-86 and 1990-91 +0.925

1985-86 and 1995-96 +0.8142

1985-86 and 2000-01 +0.85

1985-86 and 2005-06 +0.8678

III. Rank correlation co-efficient between 1985-86 per capita revenue levels and the percentage variation in per capita revenue levels.

1985-86 and 1990-91 +0.4178

1985-86 and 1995-96 +0.4142

1985-86 and 2000-01 +0.3285

1985-86 and 2005-06 +0.5535 Source : Table VI-9-Computed by us.

200

As seen from Table VI–11 the difference between lowest and

highest per capita revenue from Stamp Duty and Registration fees has moved

up from 1:9.59 in 1985-86 to 1:21.16 in 2005 – 06. The all state average per

capita revenue from this source has also increased year after year. Further,

the inter-state variation as shown by co-efficient of variation is also

continuously expanding. Thus the disparity tends to widen.

Figure VI-4

Inter-State Disparity in Per capita Revenue from

Stamps and Registration Fees

0

10

20

30

40

50

60

70

80

19

85

-86

19

90

-91

19

95

-96

20

00

-01

20

05

-06

Years

Co

-eff

icie

nt

of

Va

ria

tio

n

Source: Table VI-11

INCOME ELASTICITY

Income elasticity of stamp duty and registration fees is given by the

Table VI- 12.

201

TABLE VI-12

INCOME ELASTICITY OF REVENUE FROM

STAMP DUTY AND REGISTRATION FEES

STATES/YEAR 1985-86 - 2005-06

1.Andhra Pradesh 1.91

2.Assam 1.49

3.Bihar 2.12

4.Gujarat 1.62

5.Haryana 2.40

6.Karnataka 3.02

7.Kerala 1.54

8.Madhya Pradesh 2.74

9.Maharashtra 4.04

10.Orissa 1.25

11.Punjab 3.10

12.Rajasthan 2.73

13.Tamil Nadu 1.58

14.Uttar Pradesh 2.16

15.West Bengal 1.71

Source : Tables VI-9 & A-52-Computed by us.

The income elasticity of revenue from stamp duty and registration

fees was greater than one in all the states. If National income increases by

1% the revenue from stamp duty and registration fees will increase by more

than 1% in all the states. Thus the income elasticity of stamps duty is greater

than unity in all states. This explains that the state governments are taking

advantage of the economic expansion for collecting more revenue.

TAX – INCOME RATIO

Table VI – 13 reveals how much of our income is taken away by the

government by means of Stamp Duty and Registration fees. The tax – income

ratio is very small but it has increased in all the states. The tax – income ratio

202

203

was relatively higher in Haryana, Karnataka, Maharashtra, Punjab and Uttar

Pradesh and it was very low in Assam and Orissa. It means that the states

where the tax – income ratios are very high are efficient in collecting the

revenue and the states with lower ratios are inefficient in collecting the

revenue. In these states, the government should adopt effective measures

against possible tax evasion and curtail the list of exemptions.

In Andhra Pradesh, the Government took away 52 paise from our

income of Rs.1 in 1985 – 86 but it was 96 paise in 2005 – 06. It means that

the government gets only a small portion of our income. Any how, Stamp

Duty and Registration Fees is also an important source of revenue to the state

governments.

CONCLUSIONS

1. The total and per capita revenues from taxes on property and capital

transactions have increased at current and constant pricess in all the

states between 1985– 86 and 2005 – 06. But not in the uniform rate.

The relative positions of the states Haryana, Karnataka, Kerala,

Maharashtra, Orissa, Punjab and Rajasthan improved. The contribution

of property tax revenue to total revenue and total tax revenue has risen

in most of the states. However, there is no uniform trend. The level of

per capita property tax revenue was highest in Haryana and lowest in

Assam in all the years.

2. The relative and absolute variations in the levels of per capita property

tax revenue of the states are larger and going up.

204

3. The income elasticity of property tax revenue is less than one in Orissa

and West Bengal only and greater than one in the remaining states.

Thus this tax is responsive to changes in state income in all the states

except in Orissa and West Bengal.

4. The total and per capita land revenue went up in all the states both at

current and constant prices during the study period. West Bengal

derived more revenue from this source as compared to other states. The

percentage of land revenue to total revenue and total tax revenue came

down in most of the states. Its contribution to total revenue is 3% in

West Bengal and less than 1% in all the other states. Due to

diversification of the states’ economy, land revenue has lost its

importance in all the states.

5. Land tax is a meager source of revenue. So it has not been used for

revenue purposes. In fact cost of collection is higher than the tax yield.

So land tax is used for confirming the ownership of the land to the land

holder.

6. The Inter – state disparity in per capita land revenue was very high and it

exhibits a diverging trend.

7. The Stamp duty and registration fees offers the highest amount of

revenue among the taxes on property. The total as well as per capita

revenues have shown a rising trend in all the states. Regarding per

capita receipts the top most place of pride was held by Punjab, Haryana

and Maharashtra interchangeably. The revenue contribution by this head

to total revenue and tax revenue maintains a steady trend of increase.

205

8. The share of revenue from stamps and registration fees to all the states

total revenue and tax revenue continuously increased. It remains as the

third largest source of revenue to the states governments.

9. The inter–state variation in per capita stamp duty and registration fees is

continuously expanding. Thus the disparity tends to widen.

10. The income elasticity of stamp duty is greater than unity in all states

since people generally acquire more properties when their income goes

up.

206

REFERENCES

1. Government of India: Report of the Taxation Enquiry Commission, 1953 – 54, Volume III, P.375.

2. Richard A.Musgrave and Peggy B.Musgrave: Public Finance in Theory and Practices (Mc Graw – Hill International Book Company, New York), 1976, P.469.

3. Government of Kerala: Report of the Taxation Enquiry Committee, 1969, P.13.

4. Ibid., PP 73 – 74.

5. Dr.M.M.Varma & R.K.Agarwal: Public Finance (Forward Book Dept, Educational Publishers, Delhi), 1996, P.293.

6. Government of India: Taxation Enquiry Commission, 1953 – 54, Volume III, P.185.

7. Government of Rajasthan: Memorandum presented by the Government of Rajasthan to the part B states.

8. Quoted by B.P.Tyagi: Public Finance (Jai Prakash Nath Publications, Meerut), 1987, P.870.