Gift Deed Stamp Duty Registration Blood Relations

What is a Gift Deed?

What can be gifted?

How Can an Immovable/Movable Property Be Transferred by Way of Gift?

Registration of Gift Deed

When to Make a Gift Deed?

What Should Be Included in The Gift Deed?

How to Make It Enforceable and Legally Valid?

What Goes into A Proper Gift Deed?

Difference between a Gift Deed and Will

A Gift Deed is a legal document that describes voluntary transfer of gift from donor (owner of property) to donee (receiver of gift) without any exchange of money. The donor must be solvent and should not use this tool for tax evasion and illegal gains.

What can be gifted?

Anything which qualifies as gift must have following properties

1. It must be well defined existing movable or immovable property
2. It must be transferable
3. It should exist today and should not be a future property
4. It should be tangible.

The Transfer of Property Act of 1882 talks about transfer of a movable or immovable property by way of a gift. Section 122 of the said Act defines Gift as the transfer of certain existing property (movable or immovable), of which transfer is made voluntarily i.e. without any coercion or duress of any form and there is involved no question of any consideration whatsoever, but only natural love and affection.

It is important to mention here that the donee must accept the gift within the lifetime of the Donor and while the Donor is still in a position to give, meaning thereby that he shouldn’t be an insolvent. And in case the donee happens to die before accepting such a gift, then the gift shall be deemed as void. Read further to know about the gift deed format, registration procedure as well as the important points to be included in a gift deed.

How Can an Immovable/Movable Property Be Transferred by Way of Gift?

The Act enumerates the procedures as to how an immovable property can be transferred by way of a gift. A transfer can be effected by way of a registered instrument which needs to be signed by the donor and also attested by a minimum of two witnesses.

For the transfer of movable property by way of a gift, it can be effected by way of a registered instrument like in the case of immovable properties or by delivery, in a manner that is similar to how normal goods that are sold are delivered. A gift can only be of an existing or present property and not of any future property.

Section 17 (1) (a) of the Registration Act of 1908 makes it necessary for all instruments of gifts of immovable property to be registered with the sub-registrar of the area where the whole property or a part of it is situated within 4 months from the date of execution. A document shall come into effect from the date it was executed and not the date on which registration took place.

Non-registration of a gift deed would lead to no title over the property being transferred. The gift deed which is not registered will not be deemed valid in the eyes of law and wouldn’t even be admissible as evidence.

Hence, mere execution of a gift deed is no good. Until and unless it is duly registered, there will not be any transfer of title or interest over the property to the donee, and the donor would continue being the owner of the property.

When to Make a Gift Deed?

A Gift deed can be made in the following circumstances:

• At the time of transferring the rights of property as a gift.
• When there is no exchange of money involved.
• To provide a legal representation to the gift being transferred.

What Should Be Included in The Gift Deed?

Relationship details of the donor with the donee.

Rights & power and authority of the Donor.

Description and details of the property to be gifted.

Confirmation clause on delivery of possession.

This gift deed format is simple, yet all inclusive. If you are staring at gifting property to a dear one and looking for that perfect document, use our intuitive format and be ready to print the gift deed in minutes!

How to Make It Enforceable and Legally Valid?

You have a certain asset in mind, it could be a vehicle, a piece of jewelry or an immovable property. In order to execute any of the above properties in a Gift Deed, the property has to be already registered in the name of the Donor. All the necessary information including the name and addresses of the Donor and the Donee, relationship between the two parties and the cause of the creation of the Gift Deed goes into this document.

Firstly, get the property (to be gifted) valuated by an approved valuation expert. Secondly, assess the stamp duty and other miscellaneous charges (The value of stamp duty varies from state to state). Print the gift deed, get signature of two witnesses.

Keep handy title deeds of the property, encumbrance certificate, statement of particulars of the property at the time of registration.

An immovable property can be transferred by way of a gift only by a written document known as a gift deed. Following are the things that go into a properly drafted Gift Deed:

1. Absolute Absence of Consideration - The gift deed needs to mention that the donor is transferring his property by way of gift out of natural love and affection and ther is involved no monetary consideration. There should be absolutely no element of consideration involved. The transfer shall cease to be a gift if this important aspect of no consideration is not met.
2. No Coercion – The transfer should be voluntary and it should not be out of fear, undue influence, misrepresentation, coercion or duress of any kind. It should be gratuitous. The donor must have clear intention to make a gift and should be well aware of the consequences that will ensue once the transfer is effected.
3. Donor, The Owner of The Property – Nobody can transfer a better title than he himself has. At the time of transferring of the property by way of a gift, the donor should be the actual owner who is seized and possessed of the property, the property should be existing, gift of a future property is not admissible. He should also be the one paying taxes and levies accruing on the scheduled property.
4. Description of the Property – A gift deed should provide a proper description of the property that is being transferred eg: area, built up area, address where the property situated etc.
5. Additional Rights – This includes all rights, liabilities, easement rights that are appurtenant to the property in question.
6. Relationship between the Donor and the Donee –This clause needs to mention as to how the donor is related to the donee, whether by blood or otherwise.
7. Donee’s Rights – The gift deed should clearly mention the donee’s rights to possess, occupy and enjoy the property. The donee also has the right to accrue rent, profits etc and the donee shall have the right to use the property for his/her own use and it should be free from all legal actions, lawsuits whatsoever by the donor or any of his heirs , assigns etc.
8. Delivery of Possession – Delivery can be express or implied and some affirmative act needs to take place for it to constitute delivery. Donee should be given the vacant and peaceful possession of the gift property. All liabilities, taxes, penalties, levies etc need to be borne by the donor till the possession is given to the donee. After which all these will be borne and discharged by the donee.
9. Stamp Duty Assessment – The value of the property in question should be ascertained for ad valorem stamp duty.
10. Witnesses – The gift deed needs to be executed in the presence of at least two witnesses.
11. A gift deed needs to be duly accepted by the donee - Acceptance suggests that the donee has accepted the gift wholly and unconditionally. If the gift is not accepted by the donee, the gift will become void. The donee must accept the gift after it is executed even before it is registered.

What is the Stamp Duty on a Gift Deed?

Every state in India has a different and prescribed percentage of stamp duty that has to be imposed during the time of registration of a gift deed. The stamp duty on a gift deed is usually lower than that of a sale deed but is calculated as a conveyance that of a sale deed. The criteria for imposing a stamp duty on a gift deed vary from state to state.

Very often asset owners are confused whether they use a Gift Deed or a Will to transfer their assets.

We have listed down the difference between the two.

Gift Deed	Will
Executed during the Life Time of the Donor	Executed after the Death of the Testator
Transfer of Asset occurs immediately i.e. While the Donor is Alive	Transfer happens after the Testator Has Passed Away
Registration of Gift Deed is Compulsory to be effective.	Registration is not compulsory but advisable
Transfer using Gift Deed are Tax Free in the hands of Donee for specified relations.	Transfer through Wills is Tax Free
Gift Deed is irrevocable once Executed	Will is always revocable. Even If the Testator writes in a Will that it is Irrevocable.
Stamp Duty needs to be paid for Gift Deed. Stamp duty rate varies from State to State.	No Stamp duty is payable on Will.

So, a Gift Deed is much more secure way of transferring the assets than a Will as it is executed during the life-time of the Asset Owner. But the cost is loss of control over the asset during owner’s life-time and the stamp duty payable.

1. I would like to gift a site to my minor son? Can I execute a gift deed and make him the donee?
   A natural guardian can accept the gift on behalf of a minor and administer it until the minor attains majority. A minor is not competent to contract and hence, cannot be the accepting donee or signatory to the deed.
2. Is the gift deed for an immovable property taxable?
   Transfer of property rights to immediate relatives that includes spouse, children & parents in the form of gift deed is not taxable.
3. I am planning to purchase an apartment (under construction). Can I execute a gift deed and transfer ownership rights to my daughter?
   As you mentioned the flat is under construction, you will not be able to execute a gift deed in your daughter’s name unless the property is legally registered in your name. The gift must be on an existing property and not a future one.
4. Is the acceptance of the donee mandatory for Gift deed?Acceptance to the gift deed by the donee is mandatory. A gift deed will be considered invalid if the donee is not willing to accept the gift. Signature of the donee is a must to make the gift deed compelling on both the parties.The donee must accept the gift within the lifetime of the donor.
5. Can a registered gift deed be cancelled?
   A registered gift deed cannot be cancelled or revoked. However, one can seek legal remedy if the deed was executed by coercion or undue influence on either of the parties. This process can be painful and cumbersome as this will be contested in a competent court. An unregistered gift deed can be revoked as it holds no validity.