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.
Being a very important legal document, there are certain things that you are required to mention in a Gift Deed. Some of them are –
All disputes however are not arbitrable and there are certain disputes which fall outside categories of arbitrable disputes as held by the Hon’ble Apex Court in the matter of Booz Allen and Hamilton Inc V. SBI Home Finance Ltd. These are:
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.
Steps involved in the drafting of Gift Deed
A Gift Deed shall include the followings:
STEP 1: Draft a deed with the following essentials.
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.
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 –
The list is not exhaustive, you might need other documents like certificates relating to the value of your property depending on your state.
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. |
Following properties can be gifted:
“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.
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 –
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.
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.
Under Income Tax Act 1961, Section 56(2)(x), where any person receives from any person after the 1st day of April 2017 any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum shall be taxable under the head "Income from other sources". The given clause shall not apply to the following persons mentioned underneath:-
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.