Are you looking to make a gift deed in favour of your kin? Do you want to gift a property to your children or parents but wondering about the procedure? Curious to know what a gift deed is or how it is drafted? Then look no further. We, at LegalDesk, got you covered.
Let’s Get To The Nitty-Gritties Of A Gift Deed
A deed is a document that records the transfer of the legally-held title of a property from one party to another. Usually, only immovable property requires a deed. A gift deed records the same, the essential difference being that no price is paid for the property being transferred.
A gift deed involves two parties, the donor who is the person transferring the title and the donee who is the party to whom the property is being transferred to.
The transfer of a gift deed involves certain prerequisites that needs to met for it to be valid. They are:
- The donor should be competent to contract that means they have to know the consequences of making a gift deed and its full implication.
- For a person to make a gift deed, they should be over 18 years of age as mandated by the Indian Contracts Act, 1872.
- The transfer should be made out of free will and no factors like coercion or undue influence should have a play in it.
- There should not be any monetary consideration because then the transfer no longer remains a gift.
- For the gift deed to be valid, it should be accepted by the donee within the lifetime of the donor.
- The gift should be made out of property only to which the donor has a legal title over, meaning that a future property cannot be transferred.
- A gift deed is also irrevocable unless there are already certain exceptions spelled out in the agreement while making the gift deed regarding the conditions as to when the gift deed can be revoked.
- The document recording the gift deed also needs to have details regarding the demarcations of the property being transferred like the plot number, the dimensions of the land etc which are legally recognized.
All these prerequisites are mandated by the Transfer of Property Act, 1882 and the Registration Act, 1908.
As per Section 17 of the Registration Act, an immovable property that is being transferred must be registered for the gift deed to be recognised by the law. For registration to take place, stamp duty and a registration fee need to be paid in the sub-registrar’s office under whose jurisdiction the property falls.
Registration In Punjab
The stamp duty for a gift deed is usually much lower than that for a sale deed because of the lack of a taxable price being paid for the property to be transferred. As the stamp duty rate is a subject mandated by the state list, each state has the discretion to set its own stamp duty and registration fee rates to collect revenue.
The applicable stamp duty in Punjab varies between 0.5% to 6% as the state is in the process of amending its Stamp Act for gift deeds. However, the applicable rate for a gift deed is lower than the sale deed (which is currently 6% in Punjab) and hence, the stamp duty will fall within this range. These are the stamp duty rates to be paid in Punjab for the registartion of a property. Due to a recent amendment by the Punjab Government in 2012, no registration fee is charged when the property is transferred to any blood relative within the lifetime of the donor and the blood relatives include the spouse, son, daughter, father, mother, brother, sister, grandson and granddaughter.
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