Direct Stamp Duty Benefits

• 20 Jun 2025

Why in News? 

The Haryana government has decided to allocate 1% of total stamp duty revenue to Panchayati Raj Institutions (PRIs) to strengthen their financial capacity. 

Key Points 

• About Stamp Duty: 
  • Stamp duty is a tax levied by state governments in India on property transactions, governed by the Indian Stamp Act of 1899.  
  • The rates for stamp duty vary by state and are an essential part of the registration process for legal documents and property ownership. 
• Panchayati Raj Institution: 
  • The 73rd Constitutional Amendment Act, 1992 granted constitutional status to Panchayati Raj Institutions (PRIs), introducing a uniform three-tier structure across the country. 
  • It mandated regular elections, reservation of seats for Scheduled Castes, Scheduled Tribes, and women, and promoted the devolution of funds, functions, and functionaries to strengthen grassroots governance. 
    • Three levels of Panchayats (in most of the states)- gram sabhas (village or group of small villages), panchayat samithis (block council), and zila parishads (district). 
  • Article 243G empowers state legislatures to enable Panchayats to function as self-governing bodies for local planning and economic development. 
  • Constitutional Provisions for Financial Empowerment of Panchayats: 
    • Article 243H empowers state legislatures to allow Panchayats to levy, collect, and utilize taxes, duties, tolls, and fees. 
    • Article 280(3)(bb) requires the Central Finance Commission to recommend ways to supplement state funds for Panchayats based on the State Finance Commission’s advice. 
    • Article 243-I mandates a State Finance Commission every five years to review Panchayats’ finances and advise on tax distribution, resource improvement, and related financial matters. 
  • The Ministry of Panchayati Raj looks into all matters relating to the Panchayati Raj and Panchayati Raj Institutions. It was created in May 2004. 
• Strengthening Financial Autonomy of PRIs: 
  • The state government’s decision aims to financially empower Gram Panchayats, Panchayat Samitis, and Zila Parishads, giving them greater autonomy in planning and executing local development works. 
  • Under this scheme, the government plans to transfer Rs 572 crore to PRIs. 
• Revenue Distribution Structure: 
  • The government will transfer 1% of total stamp duty revenue to Panchayati Raj Institutions (PRIs), distributed as follows: 
    • 0.5% to Gram Panchayats 
    • 0.25% to Panchayat Samitis 
    • 0.25% to Zila Parishads 
• Previous Steps to Empower Panchayats: 
  • The government had already established inter-district councils and enabled direct fund transfers to Panchayats. 
  • These measures allow PRIs to carry out departmental functions independently, enhancing local governance.