Improving property tax collection in South Delhi

Policy Context

Increasing tax revenue can improve the ability of public institutions to finance services for citizens. However, many low- and middle-income contexts lack sufficiently high-quality administrative data on the set of properties eligible to be taxed. At the start of this project, only an estimated 37 percent of properties in the South Delhi district of India’s capital were formally registered and paying property tax, but the South Delhi Municipal Corporation (SDMC) heavily relied on this limited source of revenue to provide public goods and services to more than 3 million people.

Study Design

In 2018, SDMC started a property mapping survey to build a database of taxable properties in South Delhi. Researchers planned to work with the agency to study whether various monitoring policies would increase the likelihood that surveyors collect accurate information on property details. While the property survey was ultimately stalled by administrative obstacles in 2019, the researchers did visit 100 properties to ask owners about property taxes.

Results and Policy Lessons

In tax compliant areas, respondents were typically willing to share information about property details and their history of tax payments. Others openly explained that they had limited reasons to approach SDMC about tax estimation: there is both limited perceived risk of penalties for non-compliance, and limited trust in the SDMC’s ability to provide basic civic amenities. The researchers were able to access 75% of the sampled properties to speak with a knowledgeable respondent. This information may help SDMC collect basic information from properties and to monitor surveyor performance, supporting the SDMC’s longer-term goal of identifying their property tax base and increasing tax revenue.