Impact of newly proposed Jantri on your real estate business?

Last year in April, 2023 Jantri (Also known as Ready Reckoner or Circle Rate) were doubled abruptly by a sudden notification from Revenue Department- State of Gujarat. After 3 months of extension, it was finally implemented impacting the entire real estate market from incomplete land deals, to redevelopment proposals to project viability for real estate developers.

Now, if the Sources are to be believed from the State Revenue Department is further revising a scientific Jantri more appropriate to achieving a fair valuation of land, which is likely to be implemented from November, 2024. This would be a shortest gap (less than 18 months) between Jantri Revision. Previous update was in April, 2011, where Jantri was increased by 1.5x from previously prevailing Jantri rates, before the April, 2023 update – almost a 12-year gap.

Jantri is a legal document in Gujarat that specifies the value of land or buildings at regular intervals Here are some key points about Jantri. The Gujarat government periodically determines the unit rate for agricultural lands, Non-agricultural land, built-up spaces -residential, office and retail for each and every land parcel existing in the State of Gujarat. The land may be privately owned or publicly held.

Jantri values are primarily used for:

1. Payment of Stamp Duty on Land and property transfers such as sale, gift, lease, mortgage, partition, and exchange (including PoAs and transfer of development rights)
2. Payment of Tenancy alteration premium and conversion to Non-Agricultural (NA) land use.
3. Payment on additional- FSI purchase to AUDA, AMC, GUDA, VUDA, SMC, etc. or any other Planning or corporation body in Gujarat, and
4. Awarding TDR (Tradable/Transferrable Development rights) on projects of Heritage conservation, Slum & Public housing redevelopment and Road widening.

The newly proposed Jantri Rates are likely to hugely impact the market as they are likely to attribute higher value to land/plots on wider roads, larger size land parcels and longer road frontages. The values are likely to be lower for land or plots abutting on narrower roads, smaller in size and those having shorter road frontages or accesses. Let us discuss the possible impacts on the real estate market if the newly proposed Jantri rates are implemented in November, 2024 or a little later.

The new update may include varied uses of Jantri, extending its current usage and context. It may slowdown the market by expunging or reducing the cash component prevalent in Gujarat land deals and allowing ease of business to corporates from other states as well and foreign entities. Land parcels having location advantages in prime locations may attract higher stamp duty on transactions and transfers while redevelopment projects may have lesser stamp duty burden. A varied slab levels on stamp duty, tenure conversions, FSI and TDR all could make certain projects viable while render others non-feasible. Amid speculations it could be difficult to assess the exact impact of proposed Jantri, however, it is clear that it will change market dynamics and in longer run it is likely to streamline real estate operations and market functions; especially with resect to white economy, higher Indian corporate and overseas fund participation in the land & real estate development markets of Gujarat.

Created By: Shivalik Institute of Real Estate
Author: Dr. Jigar Pandya, Head Academics- SIRE