A property can be transferred from one person to another in mostly three ways – Sale, Will or Gift. If you are planning to give your property to one of your family members or friends, out of love and affection, without expecting money, then executing a Gift Deed and registering it would serve the purpose.
What Is A Gift Deed?
Gift is the transfer of certain existing moveable or immoveable property, made voluntarily and without consideration, by one person called the donor, to another person, called the donee, and accepted by or on behalf of the donee.
A Gift Deed is a legal document describing the voluntary transfer of a property from one person to another without any consideration as money or value in exchange. Please note that the property so gifted must be an already registered instrument in order to pass on the ownership from a donor to a donee, according to the Indian Registration Act, 1908. The executed Gift Deed must be registered at the respective Sub-Registrar office to make it valid.
As per the Section 122 of Transfer of Property Act, 1882, a “gift” is defined as the transfer of certain existing movable and immovable property made voluntarily and without consideration, by one person (donor) to another (donee), and is accepted by or on behalf of the donee.
Typically, there are three prime factors involved in the mode of transfer through a Gift Deed, which are as follows-
Donor’s Voluntary Decision
For a donor to bestow a Gift through Gift Deed, the following conditions have to be met-
- The donor must voluntarily make the Gift out of natural love and affection
- The decision should not appear as to be taken under pressure
- There should be no exchange of money involved in the act
- The donor can make a Gift should be capable of giving (should be over 18 years of age and possess a sound mind)
Acceptance By Donee
Just making a gift is not enough to make a Gift valid, but acceptance of the same by the Donee is equally important. The acceptance of the Gift may be either express or may be implied. Furthermore, the donee should accept the gift within the lifetime of the donor. In the event of death of the donee before accepting the Gift, then the Gift is rendered as void.
If the Gift is made to more than two or more donees, and if one of them does not accept it , then only the share which is not accepted becomes invalid. But the share(s) accepted by the other donee(s) remains valid.
Registration Of Gift Deed
Though there is no exchange of money involved in the process, registration of a Gift Deed is mandatory to make a valid transfer of property. Two witnesses have to be present during registration, who should also attest the Gift Deed. Once the registration process is complete, transfer of title can be made.
Stamp duty of recommended value has to be paid for registration of Gift Deed. The Stamp duty charges differ from state to state and also based on gender. Few states offer a concession in stamp duty if the property is gifted to family members.
According to the Section 17 of the Registration Act, 1908, and Section 123 of the Transfer of Property Act, it is mandatory to register a Gift Deed at the respective Sub-Registrar office. If the registration is not done, then a gift of immovable property cannot pass any title to the donee, and hence, renders the transfer void.
What Does A Gift Deed Include?
A Gift Deed should include the following-
- Date and Place of execution of the Gift Deed
- Details of the Donor (Name, Father’s Name, Date of Birth, Address)
- Details of the Donee (Name, Father’s Name, Date of Birth, Address, Relationship with Donor)
- Relationship of Donee with the Donor
- Details of the property that is being gifted
- Signatures of Donor and Donee
- Details of two witnesses in whose presence the deed was executed
- Signatures of the witnesses
Gift To Minors
A Gift can be made to a donee who is minor, but a minor cannot be a donor. If the donee is a minor, then his/her legal guardian can accept the Gift in favour of the minor. The guardian shall manage the property until the minor attains 18 years of age, following which, the donee can either accept the gift or return it to the donor.
Gifting Movable Property
Movable properties such as vehicles, cash, jewels, ornaments, etc can also be gifted. Registration is mandatory in case of Gift of an immovable property but it is optional for movable property. A letter by the donor drafted on a plain paper describing on making the Gift and an acceptance letter from the donee showing his acceptance of the Gift received by him/her will be sufficient. The Gift of movable property can be made by a registered deed or by mere delivery of the property.
Taxation of Gift
According to Section 56 (2) (vii) of the Income Tax Act, 1961, a gift is not taxable if it is received by an individual or Hindu undivided family from any relatives/blood relatives or as inheritance or at the time of marriage or in contemplation of death. But in any other context, if the aggregate of gifts received exceeds Rs 50,000 in a year, then the gift will be taxable as income from other sources.
What Are The Essentials Of A Valid Gift Deed?
To make a Gift Deed valid, one should make sure that the following requirements are fulfilled:
- Donor should make the Gift by his free consent with no consideration involved
- Donee should accept the Gift during the lifetime of the donor
- Donor should be over 18 years age and possess a sound mind
- The Gift should be tangible
- The Gift should be transferable
- The Gift should be an existing one and not a future property
- The Gift should be a registered property
- Gift Deed should be signed by both the parties (donor and donee)
- Gift Deed should be attested by two witnesses
- Gift Deed should be registered as required under the Indian Registration Act, 1908
How To Revoke A Gift Deed?
According to Section 126 of the Transfer of Property Act, a Gift Deed can be revoked if it fulfills the conditions below-
- there is an agreement between the donor and donee stating that the gift can be revoked on the occurrence of a certain event
- such an event must not be based on the mere will of the donor
- the condition should not be illegal, immoral or repugnant to the estate created under the Gift
- there must be a valid reason, based on which the Gift Deed may be rescinded as in contracts
A gift which is not based on fraud, cannot be cancelled unilaterally. Such a gift deed should be resorted to a competent court of law to get any legal remedy. Kindly note that once a gifting process is complete, it cannot be revoked. Hence, it is always better to add a clause of revocation while executing a gift deed in order to avoid future complications.
If you are planning on gifting your property to loved ones, then you should have a look at LegalDesk’s ready to use format of Gift Deed online, which is user-friendly and time-saving too. All you have to do is just fill up the blanks and place an order. Your Gift Deed will be printed on Stamp Paper and home-delivered. Then you and your donee should sign the Gift Deed and get it registered at the Sub-Registrar office of your jurisdiction.