Other states are learning too. West Bengal, for instance, was an early starter, when in FY 1995, it cut a six-year outrageous 21.2 per cent rate to 14 per cent and then, two years later to 8 per cent. Uttar Pradesh reversed a 10-year 14.5 per cent rate to 10 per cent in FY 1999. On the other hand, Madhya Pradesh, which raised rates from 2 per cent to 11.5 per cent in FY 1980 and Gujarat, which raised rates from 5 per cent to 7.5 per cent in FY 1983 and then further to 10 per cent in FY 2001 are the laggards in the rather painful history of stamp duties in India.

Going forward, the Delhi government plans to reduce it further — the state cabinet has approved a fall to 6 per cent for men and 4 per cent for women — which is good news for all stakeholders: households, the real estate and construction industry and the government. By lowering rates, the incentive to dupe the exchequer of legitimate taxes falls. The average black or unaccounted cash component in Delhi, at between 40 and 60 per cent, remains high, but it’s early days. Marry this fall in stamp duty rates with the way the Central government is trying to plug every possible loophole on the spending side, and the future of unaccounted wealth moves from black to bleak. Scholars have argued that state governments could double their stamp duty receipts if properties were valued correctly.

... contd.