When one individual gifts an immovable or movable property to another individual who may be a family member or non-family member, it is known as a gift. A gift has a valid form only if the giver and receiver are voluntarily doing it. The Gift Deed for property transfer involves the parties, stamp duty, features, and other contents, which are discussed in this blog.
When a person voluntarily gifts a property with no compensation in return, then there is a transfer of ownership under legal provisions. The gift is transferred through a “Gift Deed for property transfer,” which is a document containing all the details of the “donor” and “donee” and is protected by law for Gift Deed registration.
There are several procedures and circumstances which should be taken into consideration before making a Gift Deed for property transfer.
What is a Deed of Gift, and why is it made?
- The agreement used to transfer property ownership from one person to another under legal terms is known as a Gift Deed. A Gift Deed for property transfer can be made, with or without consideration.
- It is made to register a property as per law and make it legal under Section 17 of the Indian Registration Act, 1908, and Section 123 of the Transfer of Property Act, 1882.
- In most cases, the gift is without any compensation in return from family members or non-family members.
- The property involved is either movable or immovable and has to be mentioned elaborately in the Gift Deed for property transfer.
- Future claims and inheritance issues can be avoided through a Gift Deed for property transfer as it enables the owner to gift it to anyone. The Gift Deed registration makes it legally safe to deal with.
- A donor can gift any existing movable or immovable property. For this, a Gift Deed for property transfer is legally necessary to avoid litigations.
What are the Clauses mentioned in a Deed of Gift?
A Gift Deed for property transfer is a crucial legal document that makes the transfer legal in the eyes of the law. Various contents should be clearly mentioned in the Gift Deed clauses. These are:
- The clause of consideration should be mentioned, which explains that: no compensation or money was involved in exchange for the gift, and it is voluntarily gifted to someone dear to them. The Gift Deed for property transfer will not be considered a gift if even a minuscule consideration is involved in the exchange.
- The donor should be the sole owner of the immovable or movable property. It should exist in real-time possession and not by any future contract.
- The gift is only valid if it is made under free will, and no forgery, fraud, coercion, or threat is involved in the making of the Gift Deed for property transfer.
- Some states provide an allowance on stamp duty rates for blood relations or joint ownerships. So, it is necessary to mention the type of relation between the donor and donee to know if they are blood relatives or not.
- A brief description of the property involved must be noted in the Gift Deed for property transfer to ascertain that the property in question is “real” and existing property. Property structure, color, built, and duration is also mentioned.
- The Gift Deed for property transfer contains any rights or liabilities that can be added in the future regarding the leasing or reselling of the gifted property.
- A revocation/termination clause should also be mentioned but not necessarily implied to avoid future disputes. In the case of any litigation issues that are not acknowledgeable by both parties, it is advisable to seek legal advice to clarify the matter.
Registration of Gift Deed
The “Gift Deed for property transfer” is signed and verified by both parties. Both the parties should have their tax duty and income tax cleared. Two witnesses are needed to attest to the Gift Deed. Then, the Gift Deed for property transfer will be registered with the following documents:
- The original copy of the Gift Deed.
- PAN card.
- Aadhar card.
- Identity proof of each individual involved. (Voter ID, driving license, etc.)
- Sale deed to prove ownership title of the property.
- Any documents or agreements involved during the transfer or making of the Gift Deed for property transfer.
Other documents might be required for further legal verification and information which will be provided by the parties if asked by the registrar. The donor can seek legal advice if any issue is not clear to form a clause or register.
Income Tax and Stamp Duty Charges
The stamp duty charge on Gift Deed for property transfer is different for every state and varies between 2% to 7% depending on the location, state of the building, and tax implications.
- Delhi – women 4% men 6%
- Karnataka – family members: 1000/- to 5000/- non-family members: 5.6%
- Punjab – family members: NIL and non-family members: 6%
The “Gift Deed for property transfer” must be mentioned for ITR filing (Income Tax Returns). In 2004 a new Gift Tax Act came into action after the old 1958 act was abolished. According to this act, the tax is incurred if the stamp duty value exceeds Rs 50000/- and is accepted without consideration. However, there are some cases where the tax can be waived.
The “Gift Deed for property transfer” is a vital document for an individual gifting an immovable property to a dear one without receiving any money in return. The “donee” receives it after clearing stamp duty charges. The registration process is completed by the registrar abiding by the necessary rules and regulations.