Brief of Gift Deed Registration
A Gift Deed is a vital legal document that documents the transfer of a gift from one person to another in accordance with the law. As described in Section 122 of the Transfer of Property Act, 1822, a gift deed is a legally binding written document through which the donor can willingly transfer an existing movable or immovable property to the donee.
A Gift Deed is only legal if it is offered ‘without any compensation' in return by one family member or friend to another. If you want to transfer immovable property, you must have a registered Gift Deed under Section 17 of the Registration Act, 1908.
What are the most important provisions in a gift deed?
As an essential legal document, you must state specific things in a Gift Deed.
These are the details: -
Clause to be Considered
The Gift Deed should state that there is no exchange of money or any other form of remuneration, and that the transfer is made out of love and affection. If the size of the consideration is meaningful, it will not be regarded a gift.
Possession of Property
It is preferable if you are the titleholder of the immovable property you have in your possession, i.e., the property you wish to gift. Because you can't offer anything that you don't have, the property must be present when making a gift.
Consent is given freely
Any undue influence, compulsion, fear, or threat should be avoided during the transfer. The donation should make it obvious that the transferor intends to do so and that the transfer is voluntary.
Specifications of the property
A detailed description of the property is required, including the address, structure, colour, location, and area.
Donor and Recipient Information
The link between the donor and the donee is vital to mention, whether they are blood related or not. Some state governments also give stamp duty exemptions for presents made to blood relatives.
Rights and Obligations
Any new rights or obligations arising from this section must be disclosed in the donation deed. Any rights to sell or lease it in the future may be included in the entitlements.
An attached part of the Gift Deed is created by a distinct indication of Donee rights. It gives the donee the right to make improvements to the property, to enjoy it quietly, and to receive rents or profits from it.
Clause Regarding Delivery
A delivery clause, which confirms the transfer of property possession, often refers to the actions of the transfer ‘expressly or impliedly.'
Clauses pertaining to revocation
It is recommended to avoid future difficulties, although it is not required. Both the donor and the donee must consent to this clause, which must be stated explicitly rather than implied.
Who is eligible to be a Donor/Donee?
A Donor is someone who transfers immovable property from one person to another. Additionally, a donor must be of sound mind and capable of consenting. If a minor is unable to enter into a contract, he or she cannot be a donor.
A Donee is someone who accepts a gift or transfer that has been made to him. If the donee is under the age of 18, the gift must be approved by the donee's guardian on behalf of the donee. When a minor reaches adulthood, he or she has the option of accepting the present or returning it in the event of a responsible gift (gift attached with some conditions).
Note: If the Donee accepts the Gifts for which bills are pending, all dues will be shifted to the Donee.
What kinds of properties can be given as gifts?
There are two types of properties that can be gifted:
- Movable and immovable properties.
- A tangible property.
- A property that can be transferred.
- A property that already exists.
What documents are needed to register a gift deed?
After you've double-checked that your Gift Deed is signed and witnessed, you'll need to pay the stamp duty and registration fees required by your state. You need to carry a few extra documents like —
- Aadhar Card is a unique identification card issued by the government of India.
- Driver's licences, passports, and other forms of identification are acceptable.
- Both parties' PAN cards are required for the execution of the Gift Deed.
- The original Gift Deed will be carried out.
- A document that proves the donor's ownership of the property, such as a sale deed.
- At the time of the Gift Deed's execution, you'll need two witnesses.
- Certificate of Encumbrance
- A document that attests to the Ready Reckoner Value.
- Other Property-related agreements that you may have entered into.
- Other items may be required by state regulations.
This list is not exhaustive, so you may require other documents. Depending on your state, you may need to provide things like certificates relating to the valuation of your property.
What are the processes in creating a Gift Deed and how do I register?
The Following Are The Steps In The Drafting Of A Gift Deed:-STEP 1
Make a deed that includes the following elements.
- Mention the execution date and location.
- Date of Birth, Residential Address, Name, and Relationship Information about the Donor and Donee
- The property's whole description.
- Two witnesses are present.
- Donor and Donee signatures, as well as witnesses.
Print it on stamp paper with the appropriate value based on each state's stamp rate.STEP 3
Finally, make sure your gift deed is registered with your local registrar/sub-registrar office.
What are the stamp duties associated with registering a gift deed?
After you've finished creating the Gift Deed, go ahead and print your stamp paper with the proper value and have it registered at the registrar's office. Stamp duty can be paid in two ways: by purchasing stamp paper or by paying it online (e-stamp), with rates varying by state.
For men, Delhi is 6% while for women, it is 4%. (Market value of the property)
If the land is transferred to non-family members, the fee is 5.6 percent of the land value. In the event of family members, it can range from 1000/- to 5000/- depending on the property location.
Gujarat has a market value of 4.9 percent.
Punjab owns 6% of the property in the province. In the event of a blood relative, there is no stamp duty.
Widow has none. Female: 4%, 3% for SC/ST or BPL, Male: 5%, 1% in support of daughter or wife, 2.5 percent in case of close family members such as daughter, in-laws, son, mother, father, grandchild or grandson.
7% for males and 6% for females (total value of the property).
If the residential property or agricultural land is worth Rs.200, family members would receive 3% and relatives will receive 5%.
1% for immediate family members and 7% for other relatives
Surcharge of 1% exceeding 40 Lacs, 0.5 percent if transferred to family members, and 6% in all other circumstances.
Latest Gift Deed Notification: "Dinabandhu Mondal v. Laxmi Rani Mondal" case from the Kolkata High Court (decided on 17-06-2019) declared that the 'validity of a gift deed' does not require that it be registered by the giver himself. Any subsequent registration of a gift deed at the occurrence of the donee after the donor's death does not violate U/s 123 of the Transfer of Property Act, 1882.
It was noted that if the transaction appears to be unconscionable, the burden of evidence may be flipped in that circumstances. In this case, however, the same could not be proven. As a result, the trial court's decision was upheld, and the appeal was granted.
In more detail, what do you mean by Acceptance of Gift Deed?
Gift Deed Acceptance
Acceptance of the gift must take place before the Donee’s death, as it is a legal obligation. If the donee begins collecting rent from the Property, it is presumed that the donee has given his or her consent. If it's a conditional gift, it can't be cancelled once a valid present has been accepted.
Gift Deeds with Conditions
A conditional gift is one in which a gift deed becomes void if a certain condition that had to be met is not met. Conditions cannot be added later; they must be made before to or at the time of gifting. A condition must be something beyond the donor's control or something that is inherently unknown. After acceptance, the donee acquires absolute ownership of the property based on the rights set forth in the gift deed.
While anyone who owns the property is intended to be able to gift it, there is one exception. Minors are not permitted to transfer property because they are legally unable to create a contract. This means that any gift deed in which the minor is the donor is null and void. A legal guardian, on the other hand, can receive the gift on behalf of a minor, implying that a minor can also be done. When the juvenile reaches legal age, he or she will be offered the option of accepting the gift or returning it.
Acceptance by Fraud or Undue Influence
Undue influence occurs when the donee exploits his position of power or authority over the donor to get the gift. The 'on of proof' is on the done in such cases to demonstrate that there was no improper influence. If undue influence is shown, the gift deed becomes voidable. When a gift deed is forged using deception and lies, it is referred to as fraud or fraudulent behaviour.
What are the chances of the Gift Deed being withdrawn or cancelled?
A donation that has been made and registered according to the law cannot be cancelled. After acceptance, it becomes the Donee’s property, and the donor is unable to withdraw the deed on his own. Also, a deed in which the parties have agreed that the deed will be revocable in part or whole is not known to be a legitimate Gift Deed.
However, under Section 126 of the Transfer of Property Act, 1882, gifts can be cancelled for particular reasons. The revocation includes the return of the property to the donor, as well as the cancellation of the Gift Deed.
There are a number of reasons behind this, which are as follows:
- If there is any agreement between the donor and the donee, the gift may be withdrawn if certain specified events occur or do not occur.
- Furthermore, the donor cannot control the occurrence of such an event, as both parties must have agreed to such a circumstance/ condition in the Gift Deed.
- The terms of the agreement should not be illegal, immoral, or embarrassing to the property.
- When permission to an agreement is obtained through undue influence, coercion, deception, or fraud, the 'agreement is a contract' is voidable at the choice of the person whose consent was obtained."
- If the gift was made with the approval of the recipient, it can be revoked. If the donor dies, his heirs have the right to seek for revocation of the deed.
What are the tax implications of gifting a property by way of a gift deed?
Where a person gets an amount of money without consideration from another person after April 1, 2017, Section 56(2)(x) of the Income Tax Act of 1961 provides that the entire aggregate value (in excess of fifty thousand rupees) is taxed under the heading "Income from other sources."
The Following Persons are Excluded fromthe Application Of The Given Clause: -
- x The individual's wedding occasion.
- x The payer/donor has died.
- x As a result of a will/inheritance.
- x From any municipal government.
- x From any of your relatives.
- x Any institution that is registered under section 12A or section 12AA is eligible.
- x From any of the institutions listed in section 10's clause (23C).
- x From any establishment for the advantage of the "individual's relative."
- x Any institution referred to in clause (23C) of section 10 sub-clause (iv), sub-clause (v), sub-clause (vi), or sub-clause (via).
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Frequently Asked Questions
A Gift Deed in India is a document that records the act of giving a gift. The Gift Deed is executed between the donor i.e. the person giving the gift and the donee i.e. the person receiving the gift. A gift can be made of a movable or immovable property that is tangible and transferable.
AGift Deed is a formal legal document that is used to give a gift of property or money to any other person. It transfers the money or ownership of the property (or share in any property) to any other person without the demand of any payment in return. Giving a gift to someone else can have some kind of Inheritance Tax implications.