A gift deed is a legal document used to transfer ownership of property from one person (the donor) to another (the donee) without any exchange of money. This transfer is made out of love and affection, and the deed ensures that the transfer is legally binding and recognized by law. Understanding the intricacies of a gift deed is essential for a smooth and lawful transfer of property. In this comprehensive guide, we’ll explore everything you need to know about gift deeds, including registration, format, required documents, and more.
Table of Contents
A gift deed is a legal document that outlines the voluntary transfer of property from one person to another without any monetary exchange. This document is essential to legally validate the transfer and ensure that the donor’s wishes are honored.
A variety of properties can be transferred through a gift deed, including:
Suggested read: Partition Deed
According to Section 122 of the Transfer of Property Act, 1882, a gift is the voluntary transfer of existing movable or immovable property without any consideration from one person (the donor) to another (the donee), and it must be accepted by or on behalf of the donee during the donor’s lifetime. For immovable property, the transfer must be executed through a registered instrument signed by the donor and attested by at least two witnesses, while movable property can be gifted either by registration or by delivery of possession.
Key provisions include the requirement that only existing property can be gifted, and the donor must have ownership rights at the time of the gift. Gifts can be revoked under specific conditions, such as mutual agreement or a stipulated event occurring. Onerous gifts, involving several items with obligations, must be accepted as a whole. A universal one, who receives all of the donor’s properties, is liable for the donor’s debts. Proper execution and registration of a gift deed are crucial to ensure legal validity and recognition.
Drafting a gift deed involves several crucial steps:
A typical gift deed format includes:
Gift deed registration is mandatory for the transfer to be legally valid. The process involves:
To register a gift deed, you need:
| State | Stamp Duty | Registration charges |
| Uttar Pradesh | Male – 7%, Female – 7% | Rs 10,000 |
| Haryana | Male – 7% in urban areas, Female – 5% in urban areas | Up to Rs 50,000 |
| Maharashtra | 6% for male, 5% for female | 1% |
| Delhi | 4% | 1% + Rs 100 pasting fee |
| Gujarat | 4.90% | 1% (No charges for female) |
| Rajasthan | 5% (Male), 4% (Female) | 1% |
| Madhya Pradesh | 7.50% | 3% |
| Andhra Pradesh | 5% | 0.50% |
| Himachal Pradesh | 5%, 4% for female (till Rs 80 lakh), 8% for female (above Rs 80 lakh), 6% for male (till Rs 50 lakh), 8% for male (above Rs 50 lakh) | 4% (till Rs 80 lakh), 8% (above Rs 80 lakh) for female, 6% (till Rs 50 lakh), 8% (above Rs 50 lakh) for male |
| Tamil Nadu | 7% | 4% |
| Karnataka | 5% (above Rs 45 lakh), 3% (Rs 21-45 lakh), 2% (Less than Rs 20 lakh) | 1% |
| Punjab | 7% (Male), 5% (Female) | 1% |
| Bihar | Male to Female – 5.7%, Female to Male – 6.3%, Other cases – 6% | 2% |
| Jharkhand | 4% | 3% |
| Kerala | 8% | 2% |
| Chhattisgarh | 5% | 4% |
| Uttarakhand | Male – 5%, Female – 3.75% | 1% |
| Odisha | 5% (Male), 4% (Female) | 2% |
| Telangana | 5% | 0.50% |
| Jammu & Kashmir | 5% | 1% |
| Assam | 8.25% | 1% |
| Chandigarh | 5% | 1% |
| Goa | Up to Rs 50 lakh – 3.5%, Rs 50 – 75 lakh – 4%, Rs 75 lakh – 1 crore – 4.5%, Over Rs 1 crore – 5% | 3% |
| Manipur | 7% | 3% |
| Sikkim | 4% + 1% (Sikkimese origin), 9% + 1% (Others) | 1% |
| Arunachal Pradesh | 6% | 1% |
| Meghalaya | 9.90% | 1% |
| Mizoram | 9% | 1% |
| West Bengal | Up to Rs 1 crore – 6%, Above Rs 1 crore – 7% | 1% |
| Tripura | 5% | 1% |
Disclaimer: For the most accurate and detailed information on stamp duty rates and registration charges, it is recommended to visit the official government website of the respective states or consult with legal experts.
Canceling a gift deed involves:
When gifting property to an NGO, ensure the NGO is registered and eligible to receive such gifts. The process remains similar, but it is advisable to check for any additional legal requirements or tax implications.
A gift deed cannot be executed after the donor’s demise. Instead, a will should be used to transfer property posthumously.
If a gift deed is not accepted by the donee, the transfer is not legally valid. The acceptance must be explicitly mentioned in the deed.
Under the Income Tax Act, gifts of up to Rs.50,000 received during a financial year are exempt from tax. However, if the value of gifts exceeds this threshold, the entire amount becomes taxable in the recipient’s hands. For instance, if you receive gifts worth Rs.75,000 in a year, the entire amount is taxable. Additionally, if property is received for inadequate consideration, the difference between the stamp duty value and the consideration paid is considered a taxable gift, unless the difference is within the Rs.50,000 exemption limit.
Certain gifts are exempt from tax regardless of their value. Gifts from specified relatives, such as parents, siblings, and spouse, are tax-exempt, though any income generated from these gifts may be taxable. Wedding gifts from immediate family members are also exempt from tax. Gifts received by way of inheritance or will, as well as those from local authorities or charitable trusts registered under section 12A, are not subject to tax. Additionally, money received from educational institutions or for medical care is exempt.
A gift deed can be revoked under specific circumstances, such as:
Both the donor and one can mutually agree to revoke the gift deed. This agreement should be documented and registered to ensure legal validity.
| Gift Deed | Will |
| A legal document for transferring property immediately without monetary exchange. | A legal document expressing the donor’s wishes for property distribution after their death. |
| Immediate | Posthumous |
| Must be registered to be legally valid | Must be probated after the donor’s demise |
| May attract stamp duty and gift tax | Inheritance tax may apply depending on jurisdiction |
| Can be revoked under specific conditions | Can be changed or revoked any time during the donor’s lifetime |
| Requires detailed documentation and witnesses at the time of registration | Requires a written document, witnesses, and probate process |
| Best for immediate property transfer | Best for property transfer after death |
In conclusion, a gift deed is a powerful legal tool for transferring property without monetary exchange. Understanding the nuances of drafting, registering, and revoking a gift deed ensures a smooth and legally compliant transfer. Whether you’re gifting property to a loved one or an NGO, it’s essential to follow the correct legal procedures to avoid any future disputes.
Yes, gifting property in India involves certain tax implications. While the deed itself does not involve a monetary exchange, it must be registered, and stamp duty is applicable. Stamp duty rates vary by state and can range from 2% to 7% of the property’s value. Additionally, if the value of all gifts received exceeds Rs. 50,000 in a financial year, the amount becomes taxable under the recipient’s income.
Under current tax laws, gifts up to Rs. 50,000 received in a financial year are tax-exempt. Gifts exceeding this threshold are taxable in the hands of the recipient. However, gifts from specified relatives (such as parents, siblings, and spouse) are fully exempt from tax, regardless of the amount.
The choice between a gift deed and a will depends on the timing and nature of the property transfer. A gift deed allows for immediate transfer of property during the donor’s lifetime, while a will transfers property after the donor’s demise. A gift deed is irrevocable once executed and registered, whereas a will can be changed or revoked anytime during the donor’s lifetime.
Blood relations for gift deeds typically include parents, children, siblings, and spouses. Gifts to these relatives are often subject to lower stamp duty rates and are exempt from income tax under the Income Tax Act.
There are primarily two types of gift deeds:
Movable Property Gift Deed: Involves the transfer of movable assets like cash, jewelry, or vehicles.
Immovable Property Gift Deed: Involves the transfer of immovable assets like land, houses, or apartments.
The proof of a gift deed includes the registered gift deed document, which must be signed by the donor, the donee, and two witnesses. The registration of the gift deed at the Sub-Registrar’s office ensures its legal validity.
No, an unregistered gift deed is legally not valid for the transfer of immovable property. Registration is mandatory under the Registration Act, 1908, to make the transfer legally enforceable. For movable property, the transfer can be valid with delivery and acceptance, but registration is recommended for legal proof.
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