Delhi govt ropes in NIPF for tax revenue study, aims to plug loopholes

The Delhi government has commissioned a study to assess tax revenue of its five departments by the National Institute of Public Finance (NIPF) to plug loopholes and boost financial resources, officials said on Friday.

The study will asses tax collection of Delhi government departments, including excise, transport, trade and taxes, revenue. The move comes in the wake of a low tax-GDP ratio of Delhi, they said.

The tax-to-Gross Domestic Product (GDP) ratio is a measure of tax revenue as compared to the size of an economy. It reflects not only fiscal health of the economy but also the capacity of a government to fund infrastructure projects and welfare programmes.

Delhi's tax-to-GDP ratio was 4.9 in 2024-25. It was expected to rise to 5.16% as per budget estimates of 2025-26.

The study commissioned by the planning department of the Delhi government, will primarily examine collections under major tax heads such as excise, motor vehicles, property registration, among others, apart from assessing the efficiency of the existing tax administration, said a senior government officer.

This will help identify gaps that may be leading to revenue losses and suggest ways to plug them and boost revenue, he said.

According to the latest Economic Survey report, 68.7% of the Delhi government's expenditure budget is financed through revenue collection from goods and services tax (GST), value added tax (VAT), excise and stamp duty and motor vehicle tax.

According to the survey, GST shared by the Centre was estimated to be 71.3% of the total tax revenue in 2025-26. Excise tax collection was estimated to be 10.2 per cent of total revenue, stamp duty 13.1% and motor vehicle tax 5.4%.

The study by NIPF will also undertake a comparative assessment of tax collection trends in other states and Union Territories to identify best practices that could be adopted in Delhi, officials said.

The government expects the study to suggest reforms in tax administration, enforcement and use of technology to improve collections from existing tax streams, they added.