All about Gift Deed in India

Have you considered giving something of great importance or property to someone close? While an emotional handshake might suffice, a Gift Deed provides legal proof and gives both parties peace of mind when making such transfers – the donor (donor) and receiver (donee).

What is a Gift Deed?

A Gift Deed is a legal document that legally documents an asset being gifted from one party to another without any reciprocal financial consideration being exchanged between the parties involved. Gift deeds can be used with different types of assets including but not limited to:

• Immovable property (land, buildings or apartments) can be defined as any immovable object that cannot be transferred between owners.
• Automobiles (cars and motorcycles)

Why Use A Gift Deed? 

Gift Deeds provide many advantages in various scenarios; while not mandatory in every circumstance. Here are the main ones:

• Bring Clarity and Prevent Disputes: Documenting Ownership Clarifies Any Doubts on Valuable Items This can help dispel ownership doubts over expensive objects that might become contentious later. Documenting may help prevent intrafamily disputes.

• Registration As Legal Proof: Should any disputes arise regarding ownership changes, registering a gift deed serves as powerful evidence confirming such transition.

• Immediate Transfer: Unlike Wills which become effective only upon death, gifts under this deed pass immediately upon signing and registering it.

What Should a Gift Deed Include? 

A well-drafted Gift Deed should typically contain the following information:

• Details for both donors and donees: Such as full names, addresses and contact info for each party involved;

• Description of Gift: Please provide a clear and comprehensive account of the property or asset being gifted.

• Declaration of Gift: A written document signed by the donor that states their voluntary intent to gift property without expecting payment in return.

• Acceptance of Gift: Once presented with their present, recipients sign their signature to acknowledge acceptance.

• Signatures and Witnesses: Both donors and donees should sign their deed of gift in the presence of two witnesses who also sign the document.

Where Should Your Gift Deed be Registered? 

Registering your Gift Deed typically occurs with your local Sub-registrar office based on its jurisdiction for where the property mentioned in the Deed resides. 

Documents Needed (for Registration)

To register your Gift Deed, it will require certain key documents:

• Original Deed: The Original Deed should be prepared appropriately with both donor and donee signatures in two places as witnesses; two witnesses must then sign as witnesses of this document.

• Identity Proof: Both donors and donees will need to provide valid forms of ID such as an Aadhaar card, Driver’s License or Passport to complete this transaction.

• PAN Card: Both donors and recipients must present PAN cards to register with the government for taxation purposes.

• Proof of Ownership for Real Estate Gifts: To verify ownership, any gift involving real estate requires documentation like a sale deed or title deed as proof.

• Passport-sized photographs: This should be provided of each donor, donee, and witness.

• Witness Identification: ID proofs and address proofs must be presented for both witnesses.

Understanding Taxes and Fees on Gift Deed 

Taxes of Gift Deeds: Gifts exceeding Rs.50,000 could now fall within the “Income from Other Sources” tax bracket as of April 2017. 

Stamp Duty on Gift Deeds: A stamp duty fee must also be paid when registering the deed with the government. The precise amount varies based on your state and relationship to the Donee (recipient of the gift deed). 

Below is a glimpse at stamp duty rates across states: 

State	Stamp Duty on Gift Deed
Haryana	Rural Areas: 3%, Urban Areas: 5%
Delhi	Men: 6%, Women: 4%
Gujarat	4.9% of Market Value
Karnataka	Family Members: ₹1,000-₹5,000, Non-Family: 5.6% of Land Value (including registration fee)
Telangana	Stamp Duty: 5% of Market Value, Registration Charges: 0.5% of Market Value
Madhya Pradesh	Family Member: 2.5% of Market Value, Non-Family Member: 5% of Market Value
Maharashtra	Family Members: 3%, Other Relatives: 5%, Agricultural Land/Residential Property: ₹200
Punjab	Family Members: Free, Non-Family: 6%
Rajasthan	Men: 5%, Women: 3-4%, SC/ST or BPL: 3%, Widow: Free, To Wife: 1%, Immediate Family: 2.5%
Tamil Nadu	Family Members: 1%, Non-Family Members: 7%
Uttar Pradesh	Men: 7%, Women: 6%
West Bengal	Family Members: 0.5%, Non-Family: 6% (Surcharge of 1% above ₹40 lakh)

The Registration Process of Gift Deed

1. Visit the Sub-registrar’s office: Visit their office with all necessary documents in hand and begin the registration process.

2. Submission of Registration Forms: Submit the prescribed registration forms available either at your office or downloadable from online sources.

3. Verification and Fee Payment: Once your documents have been verified by a Sub-registrar, their calculation of registration and stamp duty fees will be done; then make payment at their designated counter.

4. Sign Additional Documents: Once fees and documents have been verified, both donors and donees (and possibly witnesses) may need to sign additional documents in front of a Sub-Registrar.

5. Receive Gift Deed: Once verification and formalities have been fulfilled, you will receive a stamped and registered Gift Deed which serves as proof of ownership transfer to the donee.

Gift Deed Format

This Gift Deed is made and executed on this [Day] day of [Month], [Year], at [City, State].

Between

1. [Donor Name], son/daughter/wife of [Father’s Name/Husband’s Name], aged [Age] years, residing at [Complete Address], hereinafter called the Donor, (which expression shall unless it be repugnant to the context or meaning thereof, be deemed to and include his/her heirs, executors, administrators and assigns) of the ONE PART.
   
2. [Donee Name], son/daughter/wife of [Father’s Name/Husband’s Name], aged [Age] years, residing at [Complete Address], hereinafter called the Donee, (which expression shall unless it be repugnant to the context or meaning thereof, be deemed to and include his/her heirs, executors, administrators and assigns) of the OTHER PART.
   

WHEREAS the Donor is the absolute owner of the property hereinafter described (for property gifts) / the Donor is the lawful owner of the items hereinafter described (for movable item gifts).

[ Description of the Property/Items Being Gifted** For Property: A detailed description including plot number, area, address, and reference to previous ownership documents. For Movable Items: A clear description of each item, including make, model, serial number (if applicable), etc.

] (hereinafter referred to as “the said Property/Items”)

WHEREAS the Donor desires to gift the said Property/Items to the Donee, out of natural love and affection and without any consideration whatsoever.

NOW THIS DEED WITNESSETH as follows:

1. In consideration of the natural love and affection which the Donor has towards the Donee and for various other good and valuable considerations, the receipt and sufficiency whereof are hereby acknowledged, the Donor HEREBY ABSOLUTELY and UNCONDITIONALLY gives grants, conveys and transfers unto the Donee, ALL THAT and THOSE the said Property/Items to hold the same unto and to the use of the Donee forever.
   
2. The Donee hereby accepts the gift of the said Property/Items from the Donor.
   
3. The Donor hereby covenants with the Donee that the Donor is the absolute owner of the said Property/Items and has the full right to dispose of the same in the manner aforementioned.
   
4. The Donor hereby declares that there are no charges or encumbrances on the said Property/Items.
   

IN WITNESS WHEREOF the Donor and the Donee have signed this Deed on the day and year first above written in the presence of the witnesses mentioned below.

Donor

[Signature]

Donee

[Signature]

Signed by the Donor and the Donee in the presence of:

1. Witness 1

[Name]

[Address]

[Signature]

2. Witness 2

[Name]

[Address]

[Signature]

Step-by-step Guide on How to Potentially Cancel a Gift Deed

1. Understand Your Options:

There are two primary methods of cancellation a Gift Deed. 

• Mutual Agreement: If both the donor (giver) and donee (receiver) agree on cancelling it, this process should be relatively painless. Draft a cancellation deed that reverses ownership transfer; an attorney should help make sure both documents are legally sound.

• Legal Action: If there’s no mutual agreement or the Deed was obtained through fraud, coercion, undue influence or the donor lacked mental capacity at the time of signing, legal action may be necessary to cancel it and represent you before the court. A lawyer can advise on possible grounds for cancellation as well as represent you before the court.

2. Collect All Necessary Documents:

• Original Gift Deed and Property documents (if applicable). Proof of Identity for both Donor and Donee is also essential.
• Evidence supporting your reason for cancellation (for legal action). 

3. Cancellation Process: 

• Mutual Agreement:
  • It may be wise to consult a lawyer to draft a deed of cancellation.
  • Both parties must sign and register the cancellation deed in the presence of witnesses. 
  • The cancellation deed should then be filed at the subregistrar’s office where the original Gift Deed was registered. For legal action to proceed:

• Legal Action: 
  • File a lawsuit against the donee in court. Your attorney can guide this process. 
  • When in court, both sides present arguments and evidence will be examined by judges; should they rule in your favour they could declare the Gift Deed null and void. 

4. Additional Considerations:

• Time Limits: Some states set time limits on filing lawsuits to annul Gift Deeds. Therefore, any such lawsuit must be filed quickly. Its Costs: Legal representation can be expensive; be mindful of these potential expenses before proceeding with legal proceedings.

• Tax Implications of Cancelling Gift Deeds in India: Canceling a Gift Deed may have tax repercussions. You should consult both your lawyer and tax advisor about this before proceeding with this step. 

Gift Tax Exemption in India 

When receiving property as gifts in India, tax exemption applies on gifts received from close relatives up to any value threshold amount; tax cannot be levied on these types of gifts received as gifts from strangers or companies up to that limit.

• Close Relatives: This term usually encompasses parents, spouses, children, siblings, grandparents, grandchildren, uncles, aunts, nieces and nephews and in-laws.
• Taxable Gifts: Gifts Exceeding Rs50,000: Any gifts exceeding Rs50,000 from sources other than close relatives constitute taxable income under “Income from Other Sources” for the receiver (Donee).
• Calculating Tax: The tax is calculated based on the income tax slab rates applicable to the Donee. 

As an example:

• If a friend gives you a gift of Rs1 lakh, all of it would be subject to income tax at 30% for tax calculation purposes.
• At Rs1 lakh, an income tax rate of 30% applies, totalling Rs30,000. 

Other points to keep in mind for tax purposes when considering property gifts: 

• Valuation: Any property received as gifts should be valued according to its market value rather than what may have been stated in its Gift Deed document if that value falls short.
• Joint Ownership: When multiple Donees receive property as gifts together, each is eligible for tax exemption of Rs50,000 each year.

Revoking a Gift Deed

While gifting property can be an act of generosity, there may come times when it is best to reconsider. A simple change of heart alone won’t do, so Indian law offers several mechanisms that could allow for revoking the deed under certain conditions.

The Governing Rule:

Section 126 of the Transfer of Property Act, of 1882 outlines in which circumstances Gift Deeds can be cancelled.

Key Points: 

• Mutual Agreement is Key: For an amicable divorce settlement, mutual consent between both donors (donor) and donee (donee) to cancel a deed is typically the simplest path forward. A lawyer can assist in drawing up a cancellation deed to reverse ownership transfers.

• Legal Grounds for Revocation: There may be legal justification to challenge a Gift Deed that was obtained unfairly:

• Deception: Occurs when a receiver lies or misleads a giver into signing. 
• Pressure: Occurs when they force or threaten someone into signing. 
• Undue Influence: This takes place when they take advantage of someone more susceptible, like an elderly person.
• Mental Capacity: If the giver was incapacitated due to illness or dementia. 

Alternatives to Revocation:

• Reaching Common Ground: If there is disagreement without legal grounds for revoking the Gift Deed, discuss possible solutions with the receiver such as selling it back to you or providing compensation.

Revoking Gift Deed with Agreement

There may be ways of nullifying a Gift Deed if both the giver and receiver (donor/donee) agree. 

Here’s what you should know:

• Asserting Conditions: When creating the Gift Deed, include an event clause outlining potential reasons that might lead to revoking it if such conditions arise – this may include anything out of their control such as a natural disaster. Make it clear that they have the option to cancel it if one arises.

• Separate Agreement: Even without being written directly into the Deed itself, an independent written agreement outlining terms for revoking can still be valid as part of a gift transaction.

Important Considerations:

• Fairness Is Key: No Gift Deed can be altered simply because its giver changes their mind or because the conditions imposed are burdensome or unfair for its recipient.

• Legal Challenges: In cases where there was no mutual agreement for revoking, and where obtaining the Deed didn’t involve fraud, misrepresentation, undue influence or mistakes then revoking it may require a court challenge. When challenging a Deed (usually the donor), they must demonstrate that they did not knowingly sign it, or were duped into signing unknowingly.

• Partial Revocation: Sometimes only part of a gift may be revocable. For example, if the donor reserves the right to take back some amount from what has been gifted, that portion could be considered invalid while leaving behind the remainder as valid gifts.

Wills or Gift Deeds for Estate Planning Purposes?

Feature	Gift Deed	Will
Purpose	Transfers ownership of property (movable or immovable) immediately during the donor’s lifetime.	Specifies how assets will be distributed after the testator’s death.
Control	Donor relinquishes control of the gifted property.	The testator retains control of the assets until death and can modify the Will at any time.
Revocation	Generally difficult to revoke unless there was mutual agreement with the donee, fraud, undue influence, or the donor lacked mental capacity.	Can be easily revoked or modified by creating a new Will.
Tax Implications	Gifts exceeding ₹50,000 from non-relatives might be taxable for the receiver.	Generally no tax implications for beneficiaries.
Registration	Registration with the sub-registrar’s office is mandatory for immovable property gifts.	Not mandatory, but registration is recommended.
Disclosure	Donee may or may not be aware of the gift until they receive it.	Beneficiaries are typically not informed about the Will’s contents until after the testator’s death.
Legal Challenge	Can be challenged in court under specific circumstances like fraud or lack of mental capacity.	Can be challenged in court by contesting its validity or claiming undue influence.

Conclusion

Gifting property and treasured items to friends and loved ones is an emotional way of showing our affection and support, but it must be approached carefully with an awareness of all legalities involved. In this blog post, we have examined Gift Deeds as they pertain to registration procedures, tax implications, revocation options, and limited instances where such action might be possible.

Frequently Asked Questions about Gift Deeds

Q1. What Is A Gift Deed? 

Ans1. A Gift Deed is a legal document used to transfer ownership of property (movable or immovable) between donors and donees during their lifetimes. 

Q2. What Are The Advantages Of Utilizing A Deed For Gift Giving? 

Ans2. Giving through a Deed can bring many advantages:

Immediate Transfer: Once registered, ownership of the property passes immediately to its new owner – known as the donee (known in legal terminology).

Clarity and Certainty: With a Deed clearly outlining all details of a gift transaction reducing future disputes over potential legalities of gifts made between close relatives may even be exempt from taxes! 

Q3. Is Registration Necessary For Gift Deeds?

Ans3. Registration with the sub-registrar’s office is necessary when giving immovable property gifts (land, houses etc).

Q4. What are the stamp duty charges for registering a Gift Deed?

Ans4. Stamp duty charges vary by state and the relationship between donor and donee, typically between 2-7% of the market value of the property being gifted.

Q5. Can I Retract My Gift Deed? 

Ans5. Revoking a Gift Deed can be challenging. In general, only under specific conditions is it possible to revoke one, such as the mutual agreement between yourself and the donee, proven fraud, undue influence, or when the donor did not have mental capacity when signing.

Q6. What are the tax implications of receiving a gift?

Ans6. Assuming gifts exceeding Rs50,000 from non-close relatives exceed this threshold and exceed the Rs50k limit set, any tax implications might fall under “Income from Other Sources.”

Q7. Gift Deed vs. Will: Which should I choose?

Ans7. A Gift Deed transfers ownership immediately while Wills only take effect upon the death of the donor. Speak with a lawyer regarding what option will best meet your gifting goals based on the laws in your state or region.

Q8. What is the role of a gift deed?

Ans8. A gift deed’s purpose is to ensure that donors meet all legal requirements associated with gifting. Donors must be of sound mind and be at least 18 years old before signing one.

Q9. What benefits does a gift deed bring?

Ans9. With a gift deed, property can be transferred smoothly between individuals both within the family and beyond it.

Q10. Under what conditions could a gift deed become invalid?

Ans10. If the recipient fails to accept the gift while the donor is alive, its deed becomes null and void.

Q11. What is the duration of validity for a gift deed?

Ans11. When an immovable property is gifted through a gift deed, its gift remains valid forever.

Q12 What constitutes a gift deed?

Ans12. A gift deed is a legal instrument through which an individual voluntarily transfers an asset either movable or immovable to another individual.

Q13. Is a gift deed legally binding?

Ans13. A gift deed holds legal significance.

Q14. Which option would be more advisable when it comes to immediate property transfer – will or gift deed?

Ans14. In general, immediate property transfers involving gift deeds are the most efficient choice.

Q15. Who is responsible for paying stamp duty on gift deeds?

Ans15. The recipient, or donee, of a gift deed, bears responsibility for paying any stamp duty fees associated with it.

Q16. What happens if I gift my property to an NGO?

Ans16. Typically, the transfer of property to an NGO or charity generally involves minimal stamp duty payments; however, local authorities must verify any regulations. Consulting with a legal professional would also be recommended.

Q17. Is it acceptable to give property to minors as gifts?

Ans17. If a property is given to a minor under 18, their legal guardian must accept it on their behalf before giving it to them. At legal age, however, the minor can choose whether or not to accept or decline their gift.

Q18. Are any payments due if I receive gifted property as gifts?

Ans18. No, gifts should always be freely given; donors only bear responsibility for stamp duty, registration fees and incidental charges associated with gift deeds. If the value exceeds a certain threshold threshold, however, it must be reported on recipient tax returns as part of any contribution received by them.

Q19. Can property received as a gift be sold?

Ans19. Assuming no conditions have been attached to the gift deed and it has been properly registered, then yes – the property can indeed be sold.

Q20. Will the donee be responsible for any taxes due on the gifted property? 

Ans20. As the legal owner, the donee is accountable for all expenses associated with his property such as utility bills, taxes and maintenance fees.