Gift Deed

Overview

A Gift Deed is a legal document through which a person (called the Donor) voluntarily transfers ownership of property or assets to another person (called the Donee) without any payment or consideration.

OVERVIEW

A gift deed is a legal document used to voluntarily transfer ownership of property, movable (like cash, jewellery, or shares) or immovable (like land or a house), from one person (the donor) to another (the donee) without any exchange of money. According to the Transfer of Property Act, 1882, the gift must be in writing, signed by the donor, and accepted by the donee during the donor’s lifetime. For it to be legally valid, it must also be registered.

Once registered, the donee becomes the legal owner of the property. While no payment is made, stamp duty and registration charges may still apply depending on the state and type of property. Under Section 56(2)(x) of the Income Tax Act, gifts from close relatives are tax-exempt, but gifts from non-relatives exceeding Rs. 50,000 in a year are taxable as income.

 

Eligibility

Under Indian tax laws, gifting property to certain close relatives is allowed without attracting gift tax. These relatives include immediate family members such as:

• Spouse (husband or wife)
• Parents (mother and father)
• Children (son and daughter)
• Siblings (brother and sister)
• Grandparents and grandchildren
• Daughter-in-law and son-in-law
• Brother-in-law and sister-in-law
• Any lineal ascendant or descendant of the donor

Gifts given to these relatives are usually not taxed, making them eligible for tax-free property transfers through a gift deed.

 

Documents Required

To legally register a gift deed, certain documents must be submitted to prove the identity of the people involved and the ownership of the property. These documents help ensure that the gift transfer is valid and legally accepted.

• Original Gift Deed: This is the main document that contains all the details of the gift. It should be properly written, signed by the donor and donee, and include all the required clauses.
• Identity Proof: You need to submit valid ID proof, such as Aadhaar card, PAN card, or driving license, for the donor, donee, and both witnesses. This helps verify their identities during the registration process.
• Ownership Proof: Documents like the sale deed, property registration papers, or property tax receipts must be submitted to prove that the donor is the legal owner of the property.
• Passport-Size Photographs: Recent passport-size photos of both the donor and donee are required to be attached to the registration documents.
• Witness Address Proof: Proof of address for the two witnesses, such as an Aadhaar card, electricity bill, or any valid ID with the current address, must be submitted.
• Encumbrance Certificate: This certificate shows that the property is not under any loan, mortgage, or legal dispute. It confirms that the property is free from any financial or legal burden.
• NOC (No Objection Certificate): In the case of agricultural land or properties in certain restricted zones, an NOC from the relevant authority may be needed to ensure there are no objections to the transfer.

 

Key Points

It is made out of love and affection

Transfer is voluntary and free of cost

 Can be used for movable property (cash, jewelry, vehicles) or immovable property (land, house)

  Must be accepted by the donee during the donor’s lifetime

  For immovable property, registration is mandatory

 

 

Rules

A Gift Deed is a legal document that allows a person to transfer ownership of property or assets to another person without taking any money in return. While gifting something might sound simple, it needs to follow certain legal rules to be valid.

1.    Voluntary Action: The gift must be given willingly by the person who owns the property or asset, known as the donor. There should be no pressure, threat, or undue influence involved. If the gift is made under duress, it is not legally valid.

2.    No Money or Exchange: A gift should be given freely, without asking for or receiving anything in return. If the donor takes any payment, even a small amount, it is no longer a gift but a sale. The idea of gifting is that it’s done out of love or goodwill, not for money.

3.    Must Be in Writing: For immovable property (like land, house, flat), the gift must be written in a legal document, known as a Gift Deed. Verbal gifts are not valid in most cases. The deed must mention the details of the property, the donor, and the donee (receiver).

4.    Mandatory Registration: As per Section 17 of the Registration Act, 1908, it is mandatory to register a Gift Deed if it involves immovable property. Registration must be done at the sub-registrar's office where the property is located. Without registration, the gift has no legal value.

5.    Signed by Witnesses: While signing the Gift Deed, it must be witnessed by at least two people. These witnesses should also sign the deed along with the donor and the donee. This helps in verifying the authenticity of the gift in case of any legal disputes.

6.    Acceptance by Receiver: The gift must be accepted by the receiver (donee) while the donor is still alive. If the donee does not accept it, the gift is not valid. Acceptance can be expressed through a signature or by taking possession of the gift.

7.    Gift Must Already Exist: You can only give something that you already own. The property or asset being gifted must exist at the time of making the gift. You cannot gift something that you might receive in the future or don’t legally own yet.

8.    Cannot Be Revoked: Once a gift deed is registered, it becomes legally binding and cannot be revoked or cancelled by the donor on their own. It can only be cancelled if both the donor and the donee agree in writing, or if a court finds the gift to be made through fraud or coercion.

9.    Tax Rules Apply: If the gift is received from a close relative, there is no tax liability. However, if it is received from a non-relative and its value is more than ₹50,000, then it becomes taxable under the Income Tax Act. The tax is paid by the receiver.

 

Gift Deed process

The Gift Deed process involves legally transferring property or assets from the Donor to the Donee without any payment.

Step-by-Step Process

1.    Draft the Gift Deed

o    Include details of donor & donee

o    Full description of the property

o    Statement that the gift is voluntary and without consideration

2.    Acceptance by Donee

o    The donee must accept the gift during the donor’s lifetime

o    Acceptance can be mentioned in the deed itself

3.    Pay Stamp Duty

o    Stamp duty varies by state

o    Usually lower for gifts to blood relatives

4.    Register the Gift Deed

o    Mandatory for immovable property

o    Both donor and donee must visit the Sub-Registrar Office

o    Registration fee is paid

5.    Signatures & Witnesses

o    Deed must be signed by donor and donee

o    At least two witnesses are required

6.    Handover of Property

o    Legal ownership is transferred to the donee

o    Property records can be updated (mutation)

Documents Required

• Identity proof (Aadhaar, PAN, etc.)
• Address proof
• Property documents
• Passport-size photographs
• Witness ID proofs

Important Notes

• Gift Deed is irrevocable once registered
• Registration is compulsory for land/house
• Oral gift is not valid for immovable property

In Short

Draft → Stamp Duty → Registration → Signatures → Ownership Transfer

If you want, I can also explain:

• Stamp duty rates
• Gift Deed vs Will
• Sample format
• Tax implication

FAQs