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Property Law

Property Gift Deed Registration

When a property is transferred to another in the form of a Gift Deed, there is a shift in ownership that is protected by law. The following article talks about the property transfer, the need to register a Gift Deed, registration procedure, circumstances under which a Gift Deed can be revoked and documentation.
Written by:
Prachi Darji
Published on
03-Sep-19

 

What is a Gift Deed? 

A Gift Deed is a legal document that represents a transfer of gift from one person to another as per the provisions of the law. Gift Deed is a legally binding written document defined in Section 122 of the Transfer of Property Act, 1822, through which the donor can transfer an existing movable or immovable property to the donee voluntarily.

A Gift Deed is valid only if it is given out of love and affection, without any consideration in return by one family member/ friend to another. Also, under Section 17 of the Registration Act, 1908, it is mandatory to have a registered Gift Deed when you want to transfer immovable property.

Table of Contents:

  • Sample Format of a Gift Deed

  • Important Clauses in a Gift Deed
  • Who can be a donor/ donee?
  • Steps involved in the drafting of Gift Deed
  • Documents required for Gift Deed Registration
  • How to register the Gift Deed in India? What is the Stamp duty in each state at the time of executing a Gift Deed?
  • What type of properties can be gifted?
  • Can a Gift Deed be revoked/canceled? 
  • What are the tax implications of gifting a property?
  • In what scenarios executing a Gift Deed is more beneficial than executing a Will?
  • Frequently Asked Questions

Sample Format of a Gift Deed

Sample Format of a Gift Deed

Click here to Download Sample Format of a Gift Deed

Important clauses in a Gift Deed

Being a very important legal document, there are certain things that you are required to mention in a Gift Deed. Some of them are – 

  • Consideration Clause – It should be clearly mentioned in the Gift Deed that the transfer is being made out of love and affection and there is no exchange of money or any other type of consideration is involved. It is irrelevant how small the consideration is, it would not be considered as a gift.
  • Possession of Property – The property you want to gift, must be in your possession i.e. you must be the titleholder of that immovable property. While making a gift, the property must be in existence, you cannot gift something that you might get in the future.
  • Free Will – The transfer should be free from any type of coercion, undue influence, threat or fear. The gift should clearly state that the transfer is voluntary and that the transferor has a clear intention of doing so.
  • Information about Property – A detailed description of the property is a must. It should clearly specify the structure, address, color, area, location, etc.
  • About Donor and Donee - The relationship between donor and donee is important as to whether they are blood relatives or not. Some state governments also offer a concession on stamp duty if gifts are made to blood relatives.
  • Rights and Liabilities – Under this clause, if any additional rights or liabilities are attached to the gift shall be mentioned. For example, any rights relating to the further sale, or leasing it further.
  • Rights of Donee – A clear mention of Donee rights forms an inseparable part of the Gift Deed. It includes the done rights to enjoy the property peacefully, to make changes to the property, receive rents or any profits that might arise from that property. 
  • Delivery- A delivery clause talks about the action (express or implied) which would confirm the delivery of the possession of the property.
  • Revocation Clause – Though not mandatory, but advisable. It will help in avoiding future complications. It has to be expressly mentioned, not implied. And donor and donee both have to agree on this clause.

Who can be a donor/donee?

A donor is a person who makes the transfer of immovable property. Any person who is of sound mind and is competent to enter into an agreement can be a donor. A minor cannot be a donor as he/she is not capable of entering into a contract. 

A donee is a person who accepts the gift/transfer made to him. A minor can be a donee however, the gift would have to be accepted by donee’s guardian on behalf of the donee. In case of the onerous gift (gift attached with some conditions), a minor after attaining adulthood, can either accept the gift or return it.

“If the donee accepts the gifts of which some bills are pending, then all the dues will be shifted on donee. For example, if you gift a property to your relative and a bill of Rs. 1000 is due then after the gift is transferred, it is your relative’s responsibility to pay the dues.” says Advocate Tanuj Agrawal.

 

Steps involved in the drafting of Gift Deed

A Gift Deed shall include the followings:

   STEP 1: Draft a deed with the following essentials.

  •  Date and Place where the deed is to be executed
  •  Information about Donor and Donee like Name, Residential Address, Relationship among them, Date of Birth, etc.
  •  Details about the property
  •  Two Witnesses  
  •  Signatures of Donor and Donee along with the witnesses

   STEP 2: Get it printed on the stamp paper of appropriate value depending upon your state

   STEP 3: Get the deed registered at your registrar or sub-registrar office. 

Documents required for Gift Deed registrations

After making sure that your Gift Deed is signed, attested by witnesses and you have paid the stamp duty and registration charges as per your state regulations. You need to carry a few other documents like – 

  • Original Gift Deed
  • ID Proofs, like Driver License, Passport, etc
  • PAN Card
  • Aadhar Card
  • A document like Sale deed to prove donor title to the Property 
  • Other Agreements which you might have entered into in relation to property

The list is not exhaustive, you might need other documents like certificates relating to the value of your property depending on your state.

How to register the Gift Deed in India?  What is the stamp duty in each state at the time of executing a Gift Deed?

After you have drafted the Gift Deed, print it on stamp paper of appropriate value and get it registered at the registrar office. Stamp duty that you need to pay varies state by state and can be paid either by buying stamp paper of such value or it can be done online.

Below are applicable Stamp Duty and Charges in some major states:

STATE

STAMP DUTY

Delhi

For Women 4% and Man 6% of the market value of the property.   

Uttar Pradesh

6% for Women and 7% for Man of the total value of the property

Karnataka

If the transfer is to non-family members it is 5.6% of the land value and in case of family members, it can range from 1000/- to 5000/- depending upon the property location.

Maharashtra

Family members – 3%

Other Relatives – 5%

If Agricultural land or residential property is gifted then it is Rs.200

Gujarat

4.9% of Market Value

West Bengal

0.5% if transferred to family members and 6% in other cases.1% surcharge above 40lac.

Punjab

None in case of a blood relative or else 6% of property value.

Tamil Nadu

1% for family members and 7% for other relatives

Rajasthan

Male -5%

Female- 4% and 3% in case of SC/ST or BPL

None for Widow

1% if it is in favor of wife or daughter

2.5% in case close family members like son, daughter, in-laws, father, mother, grandson or granddaughter.

 

What type of properties can be gifted?

Following properties can be gifted:

  • A movable or immovable property
  • An existing property 
  • A transferable property 
  • A tangible property

“If you plan to gift some property to a charity or NGO, you might not be required to pay any stamp duty depending upon your state. But, legal consultation is highly advised in such cases, because not all NGOs are allowed to accept gifts,” says Advocate Tanuj Agrawal.

There are some benefits that can be attributed to the Gift Deed. Since gifts are made during the lifetime of the donor, they are beneficial if you want someone specific to look after your properties or maybe if you need to help someone, you can transfer your property as a gift. Also, if there is a good chance that legal troubles could gather around the property, some people make a Gift Deed and avoid such litigations.

Can a Gift Deed be revoked/canceled? 

A gift once made and registered with due process of law cannot be revoked. After the acceptance, it becomes the property of the donee. The donor cannot independently revoke the deed. Also, in a deed where the parties have agreed that the deed shall be revocable in part or whole, by the mere will of the donor, is not a valid Gift Deed. 

However, under Section 126 of the Transfer of Property Act, 1882 there are certain grounds when gifts can be revoked. The revocation in itself incorporates the cancellation of the Gift Deed and the possession of the property is returned to the donor. The grounds are –

  • If there is an agreement between the donor and donee, that if certain specified events happen or do not happen, the gift shall be revoked. The point to note here is that the occurrence of such an event should not be controlled by the donor. And both parties must have agreed to such a condition in terms of the Gift Deed.
  • The conditions stipulated should not be immoral, illegal or reprehensible to the property.
  • In case of Thakur Raghunathjee Maharaj v. Ramesh Chandra, Hon’ble Supreme Court state that “even though a condition is not laid down in the Gift Deed itself, and has been provided under a mutual agreement separately but forms part of the transaction of the gift, the condition would be valid and enforceable”.
  • Another instance, when a gift can be revoked is, if they violate Section 19 of the Indian Contract Act, 1872 which says “Where consent to an agreement is caused by coercion, undue influence, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so obtained”.

So if the gift was made by obtaining consent on the above grounds it can be revoked. And in case, the donor dies, his heirs have the right to file for revocation of the deed.

What are the tax implications of gifting a property?

Gift Tax was removed in 1998 but was later bought into the purview of Income Tax in 2004. As of now, any person receiving gifts in form of money, property or any other form shall be liable to pay tax if the aggregate value of such gifts exceeds Rs.50,000 under section 56(2)(v) of Income Tax Act, 1961. The income shall be declared under ‘Income from Other Sources’.

Only in the following cases, the exemption is allowed even if the amount exceeds Rs.50000-

  • If the gift has been received by a relative; relative here means his/her spouse, brother or sister (either yours, your spouse or of your parents) and lineal ascendant/descendant of yours or of your spouse.

  • Transferred on occasion of marriage

  • If the property has been inherited or transferred under a will

  • In contemplation of death of the donor

  • Or if it falls under Section 10 of Income Tax Act, 1961, i.e. received from any school, hospital, trust, local authority, etc.

  • Received from or by a trust or institution registered under section 12AA or section 12A

In what scenarios executing a Gift Deed is more beneficial than executing a Will?

Gift Deed and Will are used for the same purpose but in a different way. Will operates only after the death of the testator and within his/her lifetime, it can be revoked or changed multiple times. Also, Will doesn’t need to be registered; only the testator signature is sufficient.

Whereas Gift Deed once registered cannot be revoked. It is more beneficial in cases, where one fears that after his/her demise there will be tension among family members regarding property ownership. It is much better to transfer property through Gift Deeds so as to avoid any future legal dispute or family troubles. Also, since Gift Deeds are registered documents, they serve as valid legal proof in case any dispute arises at a later stage. 

Frequently Asked Questions

Is registration of Gift Deed compulsory?

Yes, the registration with the sub-registrar is mandated for the gift involving immovable property under section 123 of Transfer of Property Act, 1882 and Section 17 of the Registration Act, 1908

Can a minor be the donee?

A minor can be donee, provided that the gift transferred to a minor shall be accepted on his behalf by his legal guardian. It must be accepted during the lifetime of the donor, otherwise, it would be rendered invalid under the property laws in India. If the Gift Deed is attached with some conditions, then the minor after attaining the age of majority, can either accept or return the gift. 

How is a gift different from a sales deed?

Both deeds act as an instrument for transfer of property. The only difference lies in terms of consideration. In sale deed, the property is transferred in exchange for consideration of some value but in the Gift Deed, the transferor takes nothing.

Is there an exchange of money involved in the Gift Deed?

There is no exchange of money involved in the Gift Deed. As soon as there is an exchange of something or any sort of other consideration with a value, it shall not be considered as a valid Gift Deed.

Can Gift Deed be challenged in court?

Yes, a Gift Deed can be challenged if the deed was made under threat, coercion, fear or against the will of the donor.

Can Gift Deed property be sold?

Yes, the property received under Gift Deed can be sold. Provided, that you have received the property under registered Gift Deed without any condition attached.   

Who can challenge a registered Gift Deed?

Donor and Donee both can challenge the gift. In case, of the demise of either party, their legal heirs can take legal actions. 

How to revoke a Gift Deed?

In the case of the unregistered Gift Deed, it can be easily revoked as it holds no validity. However, in the case of the registered Gift Deed, donor and donee both need to acquiesce for revocation. But, if the Gift Deed has been obtained by fraud or illegally it can be challenged under the court of law.

What if you want to gift your property after your demise?

If you want to gift your property after your demise, you need to make a Gift Deed during your lifetime. Now, the general rule is that gifts must be accepted by the donee during the lifetime of the donor. But, the Hon’ble Courts of India have clearly mentioned, that if the Gift Deed is registered after the death of the donor, it still holds valid. The requirement under Section 123 of Transfer of Property Act, is only that the donor has signed the instrument, it is not necessary for the donor to get it registered. It can be registered by the legal representatives of donor or donee.

What if the donee does not accept the gift?

If the donee doesn’t accept the gift, the donor cannot force the recipient to accept the same. The deed shall stand invalid unless the donee records the acceptance.

Can the donor claim back the gifted property?

No, once the Property has been transferred through the registered Gift Deed, the donor cannot claim back the property unless the donor proves that the Gift Deed was made under threat, coercion, undue influence or against the will.

Is Gift Deed a legal document?

Yes, the Gift Deed is a legal proof of property transfer from the donor to the donee.

Is there a tax implication on the Gift Deeds?

If the total amount/value of the deed does not exceed Rs 50,000 in a year, it is exempted from tax.

Does the donee have to pay stamp duty after receiving the Gift Deed?

Yes, as per property transfer laws, the donee becomes liable to pay pending dues such as electricity bills, maintenance, etc.

​​​​​​​What are the Pros and Cons of Gift Deed over Will

Pros:

1. You have the choice to gift the property to whomsoever you want.

2. Avoids any possible future dispute that could arise relating to the property.

3. It serves an evidentiary proof since it is registered and recorded.

4. The transfer of Property is instant unlike in the Will, where you would need to go to court for its execution.

Cons:

1. Wills are more comfortable when it comes to legal complications as it doesn’t need to be registered.

2. Wills can be changed a number of times.

3. Wills are a cheap way to transfer your property because you don’t have to pay the stamp duty and registration charges.

4. Transfer under the Will would be exempted under Tax Laws as they are governed by the Laws of Succession.