Must Knows

Everything you need to know about gift deed

[] A gift deed allows a property owner to voluntarily give his/her property to anyone and avoids any future dispute arising out of succession or inheritance claims

A gift of property, involves conferring the ownership of one’s property on to another, through a gift deed. Gifting a property through a gift deed to a near and dear one, has certain monetary implications that you should consider first.

You are reading: Everything you need to know about gift deed

What is a gift deed?

A gift deed is an agreement that is used, when a person wishes to gift his property or money to someone else. A moveable or immovable property can be gifted voluntarily using gift deed, from the donor to the donee. A gift deed allows the property owner to gift the property to anyone and avoids any future dispute arising out of succession or inheritance claims. A registered gift deed is also evidence in itself and unlike in the case of a will, the transfer of property is instant and you will not be required to go to the court of law for execution of gift deed and hence, deed of gift also saves time.

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Gift deed: What gifts have to be in a gift deed format?

A movable property, or immovable property, or an existing property that is transferable, can be gifted and require a gift deed. Having a registered gift deed, will help you avoid any litigation that comes up thereafter.

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Gift deed: How to draft it?

Draft of a gift deed must include the following details:

  • Place and date on which the gift deed is to be executed.
  • Relevant information on gift deed regarding the donor and the donee, such as their names, address, relationship, date of birth and signatures.
  • Complete details about the property for which you draft a gift deed.
  • Two witnesses to bear testimony of the gift deed and their signatures.

Thereafter, depending on the value determined by the state government, the gift deed must be printed on stamp paper after paying the required amount and the gift deed should be registered at the registrar or sub-registrar’s office.

Everything you need to know about gift deed

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Gift deed: Important clauses to mention

Here are some important things that should be mentioned in the gift deed format.

There’s no money or force involved

Make sure that you add this consideration clause to the gift deed. It must be indicated that there is no exchange of money and that the gift deed is made solely out of love and affection and not due to money or coercion.

You are the owner of your property when you gift

Only the owner can gift a property. If you are not the owner (title holder) of the property, you cannot give a property as gift deed it to someone else, even in anticipation.

Describe the property

All information pertaining to the property, such as the structure, type of property, address, area, location, etc., must be mentioned in the property gift deed format.

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Relationship between the donor and the donee

If the donor and donee are blood relatives, some state governments may offer a concession on stamp duty. Even otherwise, it is important to establish the relationship between the donor and done in the property gift deed format.

Mention liabilities

If there are rights or liabilities attached to the gift, such as whether the donee can sell or lease the property, etc., such clauses should be mentioned in the gift deed.

Delivery clause

This on the gift deed mentions the expressed or implied action of delivery of possession of the property.

Revocation of the gift

The donor can also mention clearly if he/she wants a revocation clause to be adhered to the gift deed by the donee. Both, the donor and donee, must agree on this gift deed clause.

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Sample format of a gift deed

Everything you need to know about gift deed

Documents required for gift deed registration

Apart from the aforementioned documents, you will need to produce the original gift deed, as well as ID proof, PAN card, Aadhaar card, the sale deed of the property, as well as other documents pertaining to other agreements regarding this property.

Charges for gift deed registration

State Stamp duty for gift deed
Delhi Men: 6%

Women: 4%

Gujarat 4.9% of the market value
Karnataka Family members: Rs 1,000- 5,000

Non-family: 5.6% of the land value

Maharashtra Family members: 3%

Other relatives: 5%

Agricultural land/ residential property: Rs 200

Punjab Family members: NIL

Non-family: 6%

Rajasthan Men: 5%

Women: 4% and 3%

SC/ST or BPL: 3%

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Widow: None

To wife: 1%

Immediate family: 2.5%

Tamil Nadu Family members: 1%

Non-family: 7%

Uttar Pradesh Men: 7%

Women: 6%

West Bengal Family members: 0.5%

Non-family: 6%

Above Rs 40 lakh: Surcharge of 1%

For gift deed registration, you will be required to pay the stamp duty, which varies from state to state. You can also pay the stamp duty online or at the registrar’s office.

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Gift deed: Should you pay stamp duty for gift of property to an NGO?

In usual cases, gifting a property to an NGO or charity centre does not incur any stamp duty. However, you must check with your state authority, regarding the rules. Also, in many cases, NGOs may not be allowed to accept property as a gift. It is advisable that you hire the services of an advocate, to find this out.

Can I revoke a gift deed?

After the property has been gifted, lawfully, it becomes the donee’s and cannot be revoked easily. However, according to Section 126 of the Transfer of Property Act, 1882, revoking of a gift deed may be allowed under certain circumstances:

  1. If the gift deed was made due to coercion or fraud.
  2. If it is determined that the grounds of gift deed were immoral, illegitimate or reprehensible.
  3. If it was agreed upon from the beginning that the gift deed is revocable under certain circumstances.

In such cases, even in the event of the death of the donor, his legal heirs can go ahead with the gift deed revocation.

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Income tax on gift deed

Gift deed have to be declared in the Income Tax Returns (ITR). In 1998, the Gift Tax Act of 1958 was abolished, only to be reintroduced in 2004. Therefore, in case you have been gifted an immovable property as a gift deed, you will have to pay tax, if its stamp duty value exceeds Rs 50,000 and if the property is received without necessary consideration. For example, if the consideration is Rs 1.5 lakhs while the stamp duty was Rs 4 lakhs, the difference between the two exceeds Rs 50,000.

Tax exemption for gift deed

If the property has been received from any of the following, then, the above clause shall not apply and the donee will not be taxed:

  • If gift deed received from relatives by an individual and from a member by a HUF.
  • If gift deed received on the occasion of the marriage of the individual.
  • If gift deed received under a will or by way of inheritance.
  • If gift deed received in contemplation of death of the payer or donor.
  • If gift deed received from a local authority (as defined in Explanation to Section 10(20) of the Income-tax Act).
  • If gift deed received from any fund, foundation, university, other educational institution, hospital or other medical institution, any trust or institution referred to in Section 10(23C).
  • If gift deed received from a trust or institution registered under Section 12AA.

Gift deed versus will

Gift deed Will 
Gift deed are functional even during the lifetime of the donor. Operates only after the death of the testator.
Gift deed cannot be revoked/ can be revoked only under specified circumstances. Can be revoked many times.
Property gift deed format is required to be registered under Section 123 of Transfer of Property Act, 1882 and Section 17 of the Registration Act, 1908. Need not be registered.
For registered gift deed, charges include stamp duty and registration charges. A will is comparatively cheaper.
Gift deed falls under the ambit of Income Tax. Governed by the Law of Succession.

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Can a property be gifted to a minor?

In case the property as a gift deed is being gifted to a minor, his/her legal guardian must accept it on the minor’s behalf. The minor may also accept or return the gift if he/she chooses to do so, after attaining the legal age.

Will I have to pay something in return for the property I receive as gift?

No, a gift is a gift by all means. The only charges paid by the donor, is the stamp duty and registration charges and other nominal charges that crop up because of legalities attached to gift deed. However, if the value of property/gift exceeds Rs 50,000, you may have to show it in your ITR depending, upon whom you received it from.

Can a property received as a gift be sold?

If there were no conditions attached to your gift deed and provided you have a registered the gift deed, you can sell the property.

Will the donee be liable to pay dues on the gifted property?

Yes, the donee becomes the legal owner and will then need to pay all dues and charges, such as electricity and maintenance charges, municipal taxes, etc. while giving the gift deed.

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Category: Must Knows

Debora Berti

Università degli Studi di Firenze, IT

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