Gift Deed in India: Meaning, Registration Process, Charges & Documents

If you want to give property to your dear one while you are alive, one of the most secure ways to do it legally is by using a gift deed. While a will can be used only after the death of an individual, a gift deed helps in transferring the ownership immediately. The legal processes for the transfer of property may appear to be complicated.

In order to make this process easier to understand, we have provided complete details in this article. In this article, we will discuss all the details regarding gift deeds in India, including its meaning, registration, cost, documents, and tax implication, in simple language.

What Is a Gift Deed?

The Gift Deed is an important legal instrument through which an owner (called the Donor) transfers his immovable/movable property to another individual (called Donee) for free i.e. without receiving any financial compensation in return.

For the gift deed to be a valid transaction according to the law of India (Transfer of Property Act, 1882), the transfer has to be:

• Voluntary (without any compulsion/force).
• Of existing immovable/movable property.
• Of a free transfer of ownership.
• Accepted by the Donee during the life of the Donor.

Who Can Make and Receive a Gift Deed?

A gift deed refers to a legal instrument that involves the voluntary transfer of property from one individual to another without any financial remuneration. Nevertheless, there are some legal requirements that must be satisfied for a property gift deed.

Eligibility of the Donor

The donee could be a living person, a minor, a company, or an organisation as per the applicable laws.

• In case of a minor donee, the gift may be received on his behalf by his legal guardian.
• The donee must receive the gift within the lifetime of the donor for any transfer of property through gift deed.
• Eligibility of the donor and donee should be known before gift deed registration.

• Eligibility of the DoneeThe donee may either be a living person, minor, firm, or institution depending on the prevailing law.

• If the donee is a minor, the gift may be accepted by the legal guardian of the donee.

• The donee must accept the gift during the lifetime of the donor for a successful transfer of property via gift deed.

• It is very important to understand the eligibility of both donor and donor before registering the gift deed.

Gift Deed Between Family Members vs. Non-Relatives

Between Relatives: In case of transfer of property through gift among blood relations like parents, kids, husband and wife, or siblings, several exemptions in stamp duty and registration charges apply.

Between Non-Relatives: In case of a gift of property among friends, distant relations, or among non-relatives, there are normal stamp duty and registration charges. Also, the taxation aspect is pretty heavy.

Documents Required for Gift Deed Registration

To complete gift deed registration, both the donor and donee need to provide the required documents. Keeping these documents ready can help ensure a smoother registration process at the Sub-Registrar’s Office.

• Identity & Address Proof: Aadhaar card, Voter ID, driving license, or passport of the donor and donee.

• PAN Card: This is needed to meet financial and tax requirements.

• Photographs: Recent photographs of the donor, the donee, and the witnesses.

• Proof of Property Ownership: The original title deed, sale deed, allotment letter, or any other document proving property ownership.

• Documents regarding Property Value: Any documents that mention the circle rate or market value of the property to ascertain its value and stamp duty amount.

• Details of Witnesses: Identity & address proof of at least two witnesses who will sign the gift deed.

• Other Required Documents: Encumbrance certificate, property tax receipts, NOC, etc., as per state guidelines.

These documents will help complete gift deed registration smoothly and easily.

Gift Deed Registration Process in India

There are various legal procedures involved in the gift deed registration process India in order to ensure that there is a proper transfer of property from the donor to the donee.

• Prepare the gift deed: Prepare the gift deed with all the information related to the donor, donee, and the property; it is suggested that you seek help from a professional lawyer for this process.

• Do the ownership test: Ensure that there is a proper ownership test on the property to check whether there are any dues, mortgage, dispute, etc., on the property.

• Get the gift deed stamped: Get the gift deed stamped with the relevant stamp duty either through the regular way or through the state registration portal.

• Make the appointment booking: Book your appointment at the local SRO office through the state registration portal (wherever available).

• Go to the SRO: Both the donor and donee, along with other witnesses, have to appear in front of the Sub-Registrar with all the relevant documentation.

• Verify and sign: There is a verification and signing process carried out by the officials.

• Registration fee payment: Pay the registration fee as per the norms of the respective state for registering the gift deed.

• Get the registered gift deed: Get the registered gift deed after the completion of the registration process of the gift deed.

Gift Deed Charges and Stamp Duty in India

The stamp duty and registration charges for a gift deed depends on the state where the property lies. As these rates vary from one state government to another, there is no uniform rate for all of India.

• Gift Deed Stamp Duty: Stamp Duty is a tax imposed by State governments on the transfer of property via a gift deed. The rate of stamp duty could be concessional if the transfer is from close relatives; otherwise, a percentage of the value of the property is charged.

• Registration Charges: Applicable registration charges for gift deeds differ from state to state and are usually charged based on a percentage or flat rate.

• Calculation of Charges: The calculation of stamp duty and registration charges is usually done with respect to the circle rate/guideline value/property value fixed by the government.

Before issuing the gift deed for transfer of the property, both the purchasers and donors need to check the present rate of stamp duty and registration fee for the concerned state.

Tax Rules for Gift Deeds

The tax implications of a gift deed are based on the connection between the donor and donee and the value of the gift being given. According to Section 56(2)(x) of the Income Tax Act, some gifts will not incur tax obligations, but other gifts will be liable to tax.

• Gifts to Relatives: As per the provisions of the Income Tax Act, there is no tax liability of the receiving party on the receipt of property from certain relatives like the spouse, parents, children, or brothers/sisters.

• Gifts to Non-relatives: In case of acquisition of immovable property from someone who is not a relative without any consideration, and if the stamp duty value of such immovable property exceeds ₹50,000, then the person acquiring such immovable property will be taxable on such stamp duty value as income from other sources.

• Capital Gains: While income tax rules apply upon receiving a property as a gift, Capital Gains Tax may be levied when the receiver subsequently sells that property. The cost of acquisition and the holding period are generally determined in accordance with the applicable rules of the Income Tax Act.

While the rules for gift deed taxation is when you receive a property through a gift, Capital Gains Tax will be imposed when you sell the said property. Acquisition cost and the period of holding are usually based on the rules of the Income Tax Act.

Is Gift Deed Registration Mandatory?

Yes. The registration of gift deeds is a compulsory process when the transfer of property in the form of gift is involved. As per the provisions made in Section 123 of the Transfer of Property Act 1882, the gift deed for transferring immovable property should be made through a registered document.

For any property such as land, house, apartment, or commercial building, the gift deed needs to be signed by the donor, accepted by the donee, attested by minimum two witnesses, and then get registered in the office of the Sub-Registrar.

An unregistered gift deed for immovable property does not create a proper transfer of property under the legal system. Thus, the registration of gift deeds becomes very important.

Gift Deed vs Will: What Is the Difference?

Gift deeds and wills are both ways to transfer property in accordance with the law, but they have different functions. While gift deeds transfer property while the donor is still living, a will is usually effective upon the death of the testator.

Can a Gift Deed Be Cancelled or Revoked?

Normally, there is no unilateral revocation of the registered gift deed after the completion of the gift. Nevertheless, there are certain exceptional instances where the gift can be revoked or suspended under Section 126 of the Transfer of Property Act, 1882.

• Mutual Agreement: Where the conditions of the law have been fulfilled, the donor and the donee may decide to cancel the gift.

• Fraud or Coercion: A gift can be contested on the basis that it is fraudulent, forced, obtained under duress, or misrepresented.

• Conditional Gifts: If there is a gift that is granted under a certain condition according to legal conditions, the same can be revoked if such a condition is not met.

• Senior Citizens: As per the Maintenance and Welfare of Parents and Senior Citizens Act, 2007, if there is any property that has been transferred by a senior citizen to anyone under a condition that the same will meet their needs, and if the transferor fails to do so, the senior citizen may seek relief.

As the revoking of gift deeds is dependent on the facts of the case, it is recommended to take legal advice before proceeding with the same.

Conclusion: Understanding Gift Deed Registration in India

A gift deed is one of the best ways to give away property to one’s relatives and safeguard one’s own assets for the future. However, since there are different state laws regarding stamp duty and registration, tax, and other related matters, care needs to be taken.

For professional assistance and smooth transfer of ownership, contact Moneytree Realty, India's Most trusted real estate advisor. We will provide you with valuable information on gift deed registration procedure, required documents, and charges.

Contact us on +91-9732300007 and get in touch today for professional assistance with your gift deed and property transfer requirements.

Disclaimer: This article is for general informational purposes only and does not constitute legal, tax or financial advice. Stamp duty, registration fees and tax treatment vary by state and are subject to change. Provisions of the Transfer of Property Act, 1882, the Registration Act, 1908 and the Income Tax Act, 1961 have been described in general terms. Please consult a qualified property lawyer and a chartered accountant before executing any gift deed.

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