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Gift Deed

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Overview of a Gift Deed

A Gift Deed is an important legal document that signifies a transfer of gift as per the provisions of the law from one person to another. Gift Deed is a lawfully binding written document by which the donor can transfer an existing movable/immovable property to the donee voluntarily, as defined in Section 122 of the Transfer of Property Act, 1822.

A Gift Deed is lawful only ‘without any consideration’ in return if given out of love and affection, by one family member/ friend to another. It is obligatory to have a registered Gift Deed if you want to transfer immovable property U/s 17 of the Registration Act, 1908.

Gift Deed

What are the essential clauses in a Gift Deed?

You are required to mention certain things in a Gift Deed being a critical legal document.

Those are as follows:-

  • Clause for Consideration

    It should be mentioned in the Gift Deed that there is no exchange of money or any other type of consideration is involved, and the transfer is being made out of love and affection. It will not be considered as a gift if it is relevant to how small the consideration is.

  • Possession of Property

    It would be best if you were the titleholder of that immovable property in your possession, i.e. the property you want to gift. The property must exist while making a gift because you cannot gift anything that you possibly can get in the future.

  • Free Consent

    The transfer should be free from any undue influence, coercion, fear, or threat. The gift should clearly state that transferor has a clear intention of doing so, and the transfer is voluntary.

  • Property Details

    An exhaustive description of the property must be included, which may specify the address, structure, color, location, area, etc.

  • Details of Donor and Donee

    To justify, whether they are blood relatives or not, the relationship between donor and donee is important to note. Some state governments also offer a concession on stamp duty if gifts are made to blood relatives.

  • Rights and Liabilities

    If any additional rights or liabilities are attached under this clause, it must be declared in the gift deed. Entitlements may include- any rights concerning the further sale or leasing it supplementarily.

  • Rights of Donee

    A distinct indication of Donee rights creates an attached part of the Gift Deed. It includes the donee rights to make changes to the property, enjoy the property peacefully, and get rents or any profits from that gifted property.

  • Delivery Clause

    A delivery clause, which would confirm the delivery of the possession of the property, generally talks about the actions of the transfer ‘expressly or implied’.

  • Clauses for Revocation

    It is advisable to avoid future complications; however, it is not a mandate. The donor and donee both have to agree on this clause, which needs to be mentioned, not implied.

Who can be a Donor/Donee?

Any person who makes the transfer of immovable property is known to be a Donor. Moreover, a donor must be a person who is of sound mind and is competent to agree. Any minor cannot be a donor if the person is not capable of entering into a contract.

Any person who accepts the gift/transfer made to him is known to be a Donee. The gift would have to be approved by donee’s guardian on behalf of the donee if in case donee is a minor by age. A minor after attaining adulthood, can either accept the gift or return it in case of the responsible gift (gift attached with some conditions).

Note: It must be noted that all dues will be shifted on donee if the donee accepts the gifts of which bills are pending.

What type of properties can be gifted?

The properties can be gifted as follows:-

  • A movable or immovable property
  • A tangible property
  • A transferable property
  • An existing property

What are Documents required for Gift Deed registrations?

After making sure that your Gift Deed is signed & attested by witnesses, you have to pay the stamp duty and registration charges as per your state regulations. You need to carry a few other documents like –

  • Aadhar Card
  • ID Proofs, like Driver License, Passport, etc
  • PAN card of both the parties for the execution of Gift Deed.
  • Original Gift Deed to be executed
  • A document like Sale deed to prove donor title to the Property
  • You will require two witnesses at the time of execution of Gift Deed
  • Encumbrance Certificate
  • A document certifying Ready Reckoner Value and
  • Other Agreements which you might have entered into concerning Property
  • Other materials may require according to state requirements

You might need other documents, as this list is not exhaustive. You may need to add like certificates relating to your property's value, depending on your state, etc.

How to register & what are the steps involved in the drafting of Gift Deed?

Steps involved in the drafting of Gift Deed are as follows:-

STEP 1

Draft a deed with the following essentials.

  • Mention the Date and Place for execution
  • Information about Donor and Donee like Date of Birth, Residential Address, Name, and Relationship among them.
  • A total description of the property
  • Presence of Two Witnesses
  • Signatures along with the witnesses of Donor and Donee

STEP 2

Get it printed on the stamp paper of applicable value contingent upon each state Stamp rate.

STEP 3

Lastly, kindly get Gift deed registered at your registrar/sub-registrar office.

What are the respective stamp duties for registering Gift Deed?

Go for the printing of your stamp paper with the appropriate value and get it registered at the registrar office after you are done with drafting the Gift Deed. Stamp duty can be paid either by buying stamp paper, or it can be done online (e-stamp) in which the pay varies state by state.

  • Delhi

    For Man 6% and Women 4% (market value of the property)

  • Karnataka

    It is 5.6% of the land value if the transfer is to non-family members. It can range from 1000/- to 5000/- in case of family members depending upon the property location.

  • Gujarat

    4.9% of Market Value

  • Punjab

    6% of property value. No Stamp Duty in case of a blood relative

  • Rajasthan

    None for Widow, Female- 4%, 3% in case of SC/ST or BPL, Male -5%, 1% in support of daughter or wife, 2.5% in case close family members like daughter, in-laws, son, mother, father, granddaughter or grandson

  • Uttar Pradesh

    7% for Man and 6% for Women (total value of the property)

  • Maharashtra

    If the residential property or Agricultural land-Rs.200, 3% in the case of Family members, 5 % in case of Relatives

  • Tamil Nadu

    1% for family members and 7% for other relatives

  • West Bengal

    1% surcharge above 40lac, 0.5% if transferred to family members, 6% in other cases

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CorpBiz is one of the platforms which coordinate to fulfill all your legal requirements and connect you to consistent professionals. Yes, our Clients are pleased with our legal service! Because of our focus on simplifying legal requirements, they have consistently regarded us highly and providing regular updates. Our clients can also track at all times the progress on our platform. If you have any questions about the Gift Deed registration process, our experienced legal advisors are just a phone call away. CorpBiz will ensure that your communication with professionals is charming and seamless.

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Latest Notification on Gift Deed: Kolkata High Court

Case-"Dinabandhu Mondal v. Laxmi Rani Mondal" (decided on 17-06-2019) pronounced that it is not essential for the 'validity of a gift deed' that it needs to be registered by the donor himself. After the donor's death, any succeeding registration of a gift deed at the occurrence of the donee does not offend U/s 123 of the Transfer of Property Act, 1882.

If the transaction appears to be unconscionable, it was observed that the burden of proof might be reversed in that case. However, the same could not be proved in the present case. As a result, the decision of the trial court was restored, and the appeal was allowed.

What do you mean by Acceptance of Gift Deed in detail?

  • Acceptance of Gift Deed

    Acceptance of the gift must happen before the death of the donee as acceptance is a legal requirement. If the donee starts collecting rent from the Property, it can be assumed as implied acceptance. It cannot be canceled unless it is a conditional gift as soon as a valid gift has been accepted.

  • Conditional Gift Deeds

    If a gift deed turns invalid if a specific condition that had to be fulfilled was not, it is known to be a conditional gift. Conditions cannot be added later and must have to be made before or at the time of making the gift. A condition has to be something that is not in the donor's control or uncertain by nature. The donee gains absolute right in the Property depending on the rights set in the gift deed after acceptance.

  • Minor Acceptance

    There is one exception, while anyone who owns the property is supposed to be able to gift it. Minor not allowed transferring the Property because they are legally not eligible to form a contract. This means a gift deed wherever the minor is the donor is void and illegal.

    On the other hand, a legal guardian can accept the gift on the minor's behalf, which means that a minor can also be done. Minor will be given the option of either accepting the gift or returning when the minor is of legal age.

  • Acceptance under Undue Influence or Fraud

    Whenever donee uses his position of power or authority over the donor to acquire the gift, it is called an Undue influence. In such cases, the 'burden of proof' is on the done to justify that there was no undue influence. The gift deed becomes voidable in case undue influence is proven. If the gift deed is forged through lies and deceit, in that case, then it is known as Fraud or fraudulent action.

What are the possibilities of Gift Deed getting revoked /canceled?

A gift cannot be revoked once made and registered with due process of law. It becomes the donee's property after the acceptance, in which the donor cannot self-sufficiently revoke the deed. Also, there is donor's mere will in a deed, where the parties have agreed that the deed will be revocable in part or whole is not known to be a valid Gift Deed.

Nevertheless, there are specific grounds when gifts can be revoked under Section 126 of the Transfer of Property Act, 1882. The revocation incorporates the possession of the Property, which gets returned by the cancellation of Gift Deed to the donor.

There are several grounds, which are as follows:-

  • If certain specified events happen or do not happen, then the gift shall be revoked if there is any agreement between the donor and donee.
  • Moreover, the occurrence of such an event must not be controlled by the donor, where both parties must have agreed to such a circumstance/ contingencies in terms of the Gift Deed.
  • The conditions stipulated should not be illegal, immoral, or disgraceful to the Property.
  • Case law: Hon'ble Supreme Court stated in the case of Thakur' Raghunathjee Maharaj v. Ramesh Chandra", that “the condition would be valid and enforceable, even though a condition has been provided under a mutual agreement separately. However, it forms part of the transaction of the gift which is not laid down in the Gift Deed in itself.
  • The 'agreement is a contract' voidable at the option of the party whose consent was so obtained where consent to an agreement is caused by undue influence, coercion, misrepresentation or fraud,"
  • Thus, it can be revoked if the gift was made by obtaining consent on the above grounds. Donor's heirs have the right to file for revocation of the deed in case if he dies.

What is the Taxability of gifting a property via Gift Deed?

Where any person receives from any person after the 1st day of April 2017 any sum of money, without consideration Under Income Tax Act 1961, Section 56(2)(x), the whole of the aggregate value (exceeds fifty thousand rupees) shall be taxable under the head "Income from other sources.

The given clause shall not apply to the following persons are mentioned below:-

  • Marriage occasion of the individual
  • Death of payer/donor
  • By inheritance/Will
  • From any local authority
  • From any relative
  • From any Institution registered under section 12A or section 12AA; or
  • From any Institution referred to in clause (23C) of section 10
  • From any establishment for the benefit of the “relative of the individual”.
  • Any institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10; or
  • Any transaction not regarded under clause (i)/20[clause (iv)/clause (v)]/clause (vi)/clause (via)/clause (viaa)/clause (vib) or clause (vic)/clause (vica)/clause (vicb)/clause (vid)/clause (vii) of section 47

Frequently Asked Questions

A Gift Deed is an important legal document that signifies a transfer of gift as per the provisions of the law from one person to another.

Gift Deed is a lawfully binding written document by which the donor can transfer an existing movable/immovable property to the donee voluntarily, as defined in Section 122 of the Transfer of Property Act, 1822.

A Gift Deed is lawful only without any consideration in return if given out of love and affection, by one family member/ friend to another. It should be mentioned in the Gift Deed that there is no exchange of money or any other type of consideration is involved, and the transfer is being made out of love and affection.

It would be best if you were the titleholder of that immovable property in your possession, the property you want to gift. The property must exist while making a gift because you cannot gift anything that you possibly can get in the future.

The transfer should be free from any undue influence, coercion, fear, or threat. The gift should clearly state that transferor has a clear intention of doing so, and the transfer is voluntary

If any additional rights or liabilities are attached under this clause, the gift shall be declared. Entitlements may include- any rights concerning the further sale or leasing it supplementary.

A distinct indication of Donee rights creates an attached part of the Gift Deed. It includes the done rights to make changes to the property, enjoy the property peacefully, and get rents or any profits from that gifted property.

Any person who makes the transfer of immovable property is known to be a Doner. Moreover, a donor must be a person who is of sound mind and is competent to agree. Any minor cannot be a donor if the person is not capable of entering into a contract.

The properties can be gifted can be a movable or immovable property, tangible property, transferable property & an existing property.

Stamp duty can be paid either by buying stamp paper, or it can be done online (e-stamp) in which the pay varies state by state.

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. Kindly refer to the above details for specifics required.

Acceptance of the gift must happen before the death of the donee as acceptance is a legal requirement. If the donee starts collecting rent from the Property, it can be assumed as implied acceptance.

If a gift deed turns invalid if a specific condition that had to be fulfilled was not, it is known to be a conditional gift.

There is one exception, while anyone who owns the property is supposed to be able to gift it. A legal guardian can accept the gift on the minor's behalf, which means that a minor can also be done.

Whenever donee uses his position of power or authority over the donor to acquire the gift, it is called an Undue influence. In such cases, the 'burden of proof' is on the donee that there was no undue influence.

A gift cannot be revoked once made and registered with due process of law. It becomes the donee's property after the acceptance, in which the donor cannot self-sufficiently revoke the deed.

Where any person receives from any person after the 1st day of April 2017 any sum of money, without consideration Under Income Tax Act 1961, Section 56(2)(x), the whole of the aggregate value (exceeds fifty thousand rupees) shall be taxable under the head "Income from other sources. For more information, kindly refer to the above details.

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