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What is Jantri(જંત્રી)? – By Autoscale.


 What is Jantri?

         Jantri rates are the minimum price of land / building in a particular area or Jantri  is  the  government  document  which  specifies  the market  price  of  the land  and  buildings. 

On the basis of Jantri rates government decides stamp duty to be collected in any sales deed of land or building.

In this, price (Jantri) of each land is decided by revenue department of state government depending on its Location.  Stamp Duty is the fixed percentage of tax payable to the government on  registration of each property  ownership  transaction.  Even  the  Central  Government’s  Income  tax department  considers  Jantri  price  for  the  purpose  of  Capital  Gain’s  tax calculation. Prior  to developing Jantri,  the valuation of any  immovable property was established by the government officer. This used to result in lot of favors & scrupulous transactions. To  avoid  this  Jantri  system  has  been  developed  by  the government. Till today there are certain loop holes in the system, if they are rectified this is an excellent tool to facilitate clean transactions.

In  year  1999,  Gujarat  Government  prepared  the  first  jantri. However,  the market prices quoted for each  land were for  the base year of 1997 during which  the market was booming and  real estate developments were on  its peak,  amidst  high  speculation.  These  Jantri  prices  were  not  scalable  and  non-scientific, which means  there was no mechanism  to update  them with changing market  scenario.  Year  1998  to  2003  saw  a  major  period  of  recession  which  included  a  devastating  earthquake  in  year  2001  &  a  small period of social unrest in 2002.  Land prices had plummeted and by year 2003 all cities of Gujarat witnessed heavy recession. This heavy burden of Stamp duty has been  borne  not  only  by  the  real  estate  industry  but  also  by  the  common man. Come 2006, and government is preparing a new Jantri (which may be scalable) as heard  from  industry  sources.  In  this  exercise CEPT  has  been  appointed  as  the consultant to the state government.

Jantri Prices are primarily based on certain auctions of  the plots which are very specifically sold at high premium mainly by big corporate houses &  large scale real estate operators who are willing to pay premium due to surety of legal titles &  further  these  plots  are  located  at  very  strategic  locations  where  all  the developments have already happened.

In present system certain value zones are established at macro  levels, but within the  same  value  zone  the  land  prices  of  all  the  plots  cannot  be  same. There  are certain negative factors which are attached to any parcel of land, like width of the road on which a plot abuts,  frontage  to depth  ratio, adjoining slum or hutments, titles  of  the  property,  certain  religious &  sentimental  factors,  proximity  to  high tension  electricity  supply  lines,  crematorium,  socio-economic  pattern,  stage  of infrastructure, development, etc.

Today, the burden of paying Stamp Duty is passed on to the consumer. While this may be  the  scenario  for all newly  levied  taxes  (such as Service Tax and VAT), the  Jantri  proves  to  be much more  lethal  than  any  other  tax  tool. Here’s why. Imagine  you  bought  a  house  today.  It  is  assumed  that  you will most  likely  not stay in it for your entire life. Either by professional growth you will upgrade to a better house or  in crisis may have  to sell off  the same for money. In either case, the buyer of your house will be a common man, just like yourself, not necessarily a part of real estate industry. Stamp Duty will be levied on property transactions, based  on  prevailing  Jantri Rates.  It  is  believed  that  only  40%  of  total  revenue collected by means of Stamp Duty is from the newly constructed built-up stock or land deals. More  than 60% of  total  revenues  from Stamp Duty are collected by sale  and  transfer  of  real  estate  property MUTUALLY  among  common  buyers. This makes Jantri more of a social issue rather than a real estate agenda.

This raises a big question, what  is  the significance of JANTRI?   Varying stamp Duty  rates  do  not  come  into  picture.  JANTRI  prices  should  be more  realistic, scientific  and  simple  to  understand. When  considering  Land,  Prices  should  be adjusted  based  on  several  locations,  legal,  physical  and  planning  parameters. When  considering  built  property,  Depreciation  of  construction  should  be considered and there should be different rates based on how old the construction is?  For  example,  more  than  3  years,  5  years,  9  years  or  15  years.  As  built properties  such  as  a  Flat  or  apartment  does  not  have  an  alternate  Land  use  by single owner,  land  appreciation  should be  ruled  out while  considering  its value and  only  depreciation  of  constructed  value  should  be  considered.  While calculating  the  construction  Jantri  prices,  various  factors  such  as  type  of Structure, infrastructure provisions, maintenance condition and specifications will have play a vital role to decide the construction Jantri prices.

Take  real estate  sector  for example.  If  you  consider  the  total  tax component on the final built product, it comes to around 27% of total product value. This means that if you are purchasing a Flat worth 15 Lakhs, than Rs. 4.06 Lakhs is the total taxes  that are  included  in  this  final price. Had  there been no  taxes,  the value of this flat would have been 10.94 Lakhs only. These are alarming numbers and the following is the justification of these numbers. The  above  tax model  is  certainly  taxing,  especially  for  consumers.  This  is  an alarming situation. This a very heavy burned on lower and middle income people and  spoils other  incentives  for creating new housing  stock and  it will  indirectly attracts illegal transactions and loss on state exchequer.

Property Knowledge By Autoscale.

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