Are property taxes buoyant? Evidence from Indian states

Abhishek Seth (), Manish Singh () and Diya Uday ()
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Abhishek Seth: Indian Institute of Technology Roorkee
Manish Singh: Indian Institute of Technology Roorkee, xKDR Forum
Diya Uday: xKDR Forum

No 42, Working Papers from xKDR

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.

JEL-codes: C23 H2 H71 H72 R51 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2025-10
New Economics Papers: this item is included in nep-pbe, nep-pub, nep-sea and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:anf:wpaper:42

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