Legal Guide

How to Calculate Stamp Duty for Gift Deeds?

by Bhavya Choudhary · 3 min read

stamp duty for gift deed

When an individual gifts a property, either movable or immovable, they must follow certain guidelines and legal regulations to validate the gift. These implications must be observed and should be accordingly followed. Stamp duty for Gift Deeds is one of the implications and a crucial process while receiving a gifted property.

What is a Deed of Gift?

A Deed of Gift is a formal document that mentions the voluntary transfer of an individual’s property (movable or immovable property). The deed contains all the details regarding the property that is gifted. A person who is gifting is called the “donor,” and the person who receives is called the “done”.

It is usually gifted with no compensation or consideration in return. A Gift Deed can be of any movable or immovable property or asset. Every significant detail about the gift is noted down in a Gift Deed. The stamp duty for Gift Deeds makes it legally valid and avoids future complications.

Essential features of a Gift Deed

  • The Gift Deed should contain the signature of the “donor,” and if by any circumstances the donor is not able to sign, then the person who acts on their behalf can sign the document.
  • The Gift Deed should be attested by two witnesses in the presence of the “donor”. And the donor or the person who will sign on his/her behalf should also attest in the presence of two witnesses. It can be valid only if the witnesses are present. Legal advice is recommended for such situations to understand every factor.
  • The stamp duty for Gift Deeds makes it legally certified.
  • The Gift Deed registration must be completed formally after paying the stamp duty for Gift Deeds. 
  • The individual must get it registered under Section 17 of the Indian Registration Act, 1908. It is registered in the presence of a registration authority that will authorize the necessary documents and attest it to make it legally binding.
  • Gift Deed registration of the movable property isn’t mandatory.

The meaning of Stamp Duty

  • The tax which is imposed by the Government during any property transaction or transfer is known as stamp duty. The stamp is generally impressed or a physical stamp is affixed on the document for the transaction of immovable property.
  • It is stamped to imply that the tax is paid. The ownership of the gifted property can only be legally verified if the registration charges and stamp duty for Gift Deed are settled.
  • The state government is in charge of collecting stamp duty and is accounted for as direct tax by Section 3 of the Indian Stamp Act, 1899.
  • It is not the same for every state. Different states have different percentages to calculate the stamp duty for Gift Deeds or any other transaction.

The factors governing Stamp Duty for Gift Deeds in India

Various factors affect the stamp duty for Gift Deeds in India as it is mentioned above that it may vary from state to state. The stamp duty is different for various states and should be paid under the law provisions.

  • The location of the property matters when it is charged for stamp duty for the Gift Deed (urban areas have higher stamp duty rates than that of rural areas).
  • The total market value of the property is considered before the stamp duty percentage is measured. It also depends on how old the property is because old buildings have a depreciative effect on the charges. Recent properties may attract higher charges.
  • The age of the owner also plays a crucial role while determining the charges of stamp duty for Gift deeds, as the Government has subsidized the charges for senior citizens of India.
  • Gender has another impact because women receive an allowance for charges if she is the owner of the property.
  • Commercial property may have more stamp duty charges than residential property.

How to calculate the Stamp Duty for Gift Deeds?

  • If there is no document as such, the “donee” has to clear the stamp duty for Gift Deed charges in full. In some agreements, it is stated that the stamp duty will be voluntarily cleared by both parties in the equal division.
  • The stamp paper validity will be disabled if it is not purchased in the name of either “donor” or “donee.” Its validity is for 6 months only after purchasing it, that is, if the duty is timely paid.
  • It is collected on every property transaction, and rates may vary from 2% to 7%.
  • Stamp duty rates of different states vary a lot. Rates of some cities are as follows:
  • Delhi:  The stamp duty rates are different for men and women here. It is 4% for women and 6 % for men on the market value of the property. (Joint ownership rate is 5%)
  • Bangalore: If it is not gifted to a family member, then the stamp duty for the Gift Deed is 5%, and for family members, it is at a fixed rate and divided according to the location. If it is within Bangalore metropolitan, regional development (BMRD), or city corporation, then it is charged at Rs 5000/-. If it is situated within the city council limits, then it’s Rs 3000/-.Anything other than these is charged at Rd 1000/.
  • Kolkata: For blood relatives, the stamp duty for Gift Deed is charged at 0.5% and for other individuals, it is charged at 5% in rural areas and 6 % in urban and corporation areas.
  • Mumbai: The stamp duty for Gift Deed depends on the type of property which is being gifted. Stamp duty for agricultural and residential areas is Rs 100/-. The property gifted to a family member is charged at a rate of 5%, and the stamp duty for Gift Deed charged is 6% if it is being gifted to non-family members.
  • Jaipur: The stamp duty for Gift Deed charges is 5% for both men and women at the total market value of a property.
  • Chandigarh: The stamp duty for Gift Deed is charged at the rate of 6% in the Union Territory of Chandigarh.
  • Chennai: Chennai charges the stamp duty for Gift deeds at a rate of 1% for family members and blood relations and 5% for non-family individuals.

Conclusion

The legal implications should be met while paying the stamp duty for Gift Deeds and other property-related transactions. Every property has to be registered, stamp duty paid, and income tax cleared in full to be gifted.

The charges are different for every state and can depend on a lot of factors, so to gain full clarity over the situation, one must get legal advice before taking any step.

Gifting a property to a loved one or someone close to you is a big step, and it is crucial to have knowledge regarding the rules and regulations imposed by law. Consult a lawyer before going further with any registration of agreement to be sure the provisions are being rightly handled.

Bhavya Choudhary

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Bhavya Choudhary

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