Legal Guide

Concept of gift under Transfer of Property Act

by Bhavya Choudhary · 4 min read

gift under transfer of property act

Introduction

In general, a gift under the Transfer of Property Act is understood to be the transfer of ownership of a property when the giver does so without remuneration or monetary consideration. It may be in the form of movable or immovable property, and the transfer must be between two living people, or it may occur only after the transferor’s death. 

When the transfer occurs between two live persons, it is known as inter vivos, but when it occurs after the transferor’s death, it is known as testamentary. Section 5 of the Transfer of Property Act does not apply to testamentary transfers, hence only inter vivos transactions are referred to as gifts under the Transfer of Property Act.

Essential elements of Gift under Transfer of Property Act

There are five requirements for a valid Gift under the Transfer of Property Act:

  1. Transfer of property
  2. Existing property
  3. Transfer without consideration 
  4. Free consent and voluntary transfer 
  5. Acceptance of gift under Transfer of Property Act

Transfer of property

The transferor, i.e. the donor, must relinquish all interest in the property to the transferee, i.e. the donee. The transfer of absolute interests entails the transfer of all property-related rights and responsibilities. 

For such a transfer to be possible, the donor must hold ownership rights to the property in question. No less than ownership may be transferred by gift. However, similar to other transfers, the gift under the Transfer of Property Act may be subject to certain terms.

Existing real estate

The property that is the subject of the gift under the Transfer of Property Act may be of any kind, moveable, immovable, tangible, or intangible, but it must exist at the moment the gift under the Transfer of Property Act is made and be transferable according to Section 5 of the Transfer of Property Act.

Any gift under the Transfer of Property Act of future property is null and void.

Transfer without consideration

A gift under the Transfer of Property Act must be gratuitous, meaning that the transfer of ownership must occur without compensation. 

Even a tiny property or a very little quantity of money provided by the transferee in return for a very large property might qualify the transaction as a sale or an exchange. Therefore, to constitute a gift under the Transfer of Property Act, the transfer must be without consideration. 

Free consent and voluntary transfer 

The donor must make the gift under the Transfer of Property Act willingly, i.e., out of his own free will and with his assent, which is free consent. Free consent is when the donor has total freedom to make the donation without any compulsion, deception, or undue influence. 

The donor’s intent in completing the gift deed must be free and independent. A donor’s voluntary act also indicates that he or she performed the gift deed with full awareness of the circumstances and nature of the transaction. There is stamp duty for gift deeds. This stamp duty for the gift deed must be paid. 

The donee is responsible for showing that the donation was made willingly and with the donor’s permission. Therefore, to make a gift under the Transfer of Property Act, the transfer must be made voluntary and with consent. 

Acceptance of the gift under the Transfer of Property Act

The recipient must accept the gift under the Transfer of Property Act. A person cannot be granted property, even as a gift under the Transfer of Property Act, without his or her permission. The recipient may decline the present, in the event of a non-beneficial or onerous gift. 

Therefore, acceptance of the gift under the Transfer of Property Act is required. This acceptance might be either explicit or implicit. Acceptance may be inferred from the behavior of the recipient and the surrounding conditions.

Provisions pertaining to Onerous gifts

  • Onerous gifts under the Transfer of Property Act are those that are more of a burden than an advantage. The definition of “onerous” is burdensome. Thus, when a property’s responsibilities surpass its advantages, it is referred to as an onerous property. 
  • When such a gift under the Transfer of Property Act is made, it is referred to as an onerous gift or a non-beneficial gift. The recipient has the option to decline such gifts under the Transfer of Property Act.

Universal donee

  • A universal donee is the recipient of a gift of all of the donor’s assets. These properties encompass both moveable and immovable items. 
  • In this respect, Section 128 stipulates that the donee is responsible for any obligations and liabilities of the donor due at the time of the gift under the Transfer of Property Act. This section reflects the equitable notion that those who profit from a transaction must also endure its burdens.
  • However, the donee’s responsibilities are restricted to the value of the gift he has received. 
  • If the obligations and debts exceed the whole property’s market worth, the universal donee is not responsible for the extra portion. This clause safeguards the creditor’s rights and ensures they may pursue the donor’s assets if he owes them money.

Gift suspension or revocation

Section 126 of the Act specifies the legal requirements that must be met in the event of a conditional gift under the Transfer of Property Act. 

The donor may make a gift under the Transfer of Property Act subject to specified restrictions about its suspension or revocation, and these requirements must comply with Section 126. 

This section specifies two reasons for the cancellation of gifts under the Transfer of Property Act, and only these grounds may be used.

  • Cancellation with mutual consent
  • Cancellation by rescinding the contract

Attorney consultation must be taken to get the right advice. Attorney consultation guides you on the right path.

Exceptions

The gifts under the Transfer of Property Act that are recognized as exceptions to the whole chapter on gifts under the Transfer of Property Act are outlined in Section 129. These are the following:

  • Donations mortis causa
  • These are presents crafted with death in mind.
  • Muslim gifts (Hiba)

This is controlled by Muslim Personal Law. Declaration, acceptance, and transmission of possession are the only fundamental conditions. No registration is required, regardless of the amount of the contribution. 

In the event of a gift of immovable property worth more than 100 Rupees, Section 17 of the Indian Registration Act must be followed since it applies to Muslims as well. For a gift to be considered Hiba, only the giver must be Muslim; the religion of the recipient is immaterial.

Conclusion

To qualify as a gift under the Transfer of Property Act, a transfer must comply with the conditions of the Transfer of Property Act. This Act describes the gift and the conditions surrounding its transfer in great detail. As a transfer of ownership rights, the gift must exist and be in the transferee’s possession and ownership.

To get the gift deed enforced in the Court of Law, it must be registered. One must get the gift deed registered by an expert lawyer.

Bhavya Choudhary

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Bhavya Choudhary

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