Stamp Duty And Registration Charges on Gift Deed Registration In India

by  Adv. Priyanka Sampathy  

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stamp duty and registration

Introduction

There are several rules and regulations regarding stamp duty and registration charges that must be followed while gifting a property in India. The provisions and legal implications must be thoroughly understood and considered while buying a property with a clear ownership title and gifting it to someone who is either family or a relative. 

When gifting a property, certain stamp duty and registration charges are to be paid to make it a valid gift. The deed of gift is registered only after the stamp duty, and registration charges have been cleared. It is registered with the sub-registrar of the concerned area.

Properties that can be Gifted

According to the Transfer of Property Act 1882, there are some requirements for gifting a property which to adhere regarding the property being gifted that are as follows:

  • Any movable or immovable property is allowed to be gifted.
  • It must be a transferable property that exists.
  • The property should not be a part of a future asset or owned jointly with someone else.
  • It should be tangible.

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Stamp Duty on the Deed of Gift

  • The stamp duty and registration charges should be taken care of while gifting a property. 
  • The percentage of stamp duty and registration charges are different for every State and have an allowance for blood relatives.
  • It can range somewhere between 2% to 7%, depending on the size, locality, and area of the property.
  • The stamp duty and registration charges are paid to legally validate the gift deed. The donor pays the stamp duty and registration charges to transfer the property as a gift because if the donee clears it, then the gift will become invalid as there is a monetary exchange involved.
  • The stamp duty and registration charges are generally more or less the same as that of the Sale deed.
  • The legal evidence of ownership is received only after clearing the stamp duty and registration charges. It is collected and levied by the State Government.
  • Stamp duty comes under the direct tax payable under section 3 of the Indian Stamp Act 1899. 
  • The parties can seek online legal advice to determine the amount to be cleared after considering every factor as consulted with the lawyer.

Factors that affect Stamp Duty

There are a few factors that affect the percentage of stamp duty and registration charges as they varies from State to State:

  • The Location of the property affects the stamp duty and registration charges directly, as civil or municipal areas and rural or urban areas have different charges.
  • The age of the property plays a vital role in determining the stamp duty and registration charges, as the stamp duty is calculated on the total market value of the property. Latest properties can have higher stamp duty and registration charges than old buildings.
  • The stamp duty and registration charges are subsidized for senior citizens in most states, so stating the age is crucial to determine the exact amount to be paid.
  • Gender helps in determining the stamp duty and registration charges, as some states have different charges for men and women. Women are allowed concession in a few states if the property is in their name.
  • The type of building that is being gifted can make a big difference in stamp duty and registration charges, as commercial buildings may have higher charges than residential buildings.

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Does Ownership transfer take effect instantly?

  • The donor must be aware that as soon as the gift deed is registered successfully, the ownership is transferred from the donor to the donee. It is similar to that of a sale deed as it also comes into effect immediately.
  • The case of the will is, however, different; the ownership is transferred only after the demise of the owner of the property. The gift deed can only come into effect if the stamp duty and registration charges are cleared fully.

Different Percentages of Stamp Duty for Different States

The stamp duty and registration charges are different for every State and can vary accordingly:

Registration charge

The gift deed also has registration charges just like any other deed, which makes it legally valuable and binding.

Some states charge a standard fee for this process, while some states charge 1% of the total property value.

Calculation of Stamp Duty on Gift Deed

  • The stamp duty is calculated on the total property value. 
  • Example: In Maharashtra, the stamp duty percentage is 3%, and suppose the property total cost is 1 Crore.
  • So the stamp duty will be 3% of 1 Crore, which is 30 Lakhs. This is to be paid for registering the gift deed.

People Also Read: Detailed Guide on Gift Deed Stamp Paper Charges

Can a Gift Deed be terminated?

  • A gift deed can only be revoked if the revocation clause is present in the gift deed after it was mutually agreed upon.
  • In this particular clause, the donor must state clearly that even after the transfer, the property can be taken back if needed or necessary.
  • Moreover, it can be revoked because some kind of coercion or fraud was involved during the drafting of the gift deed, and it wasn’t voluntarily made.

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Conclusion

The gift deed is bound legally only after clearing the stamp duty and registration charges. The charges may vary and can be complex due to concessions allowed for different reasons, so taking online legal advice can solve your queries.

The Gift Deed registration process is a crucial procedure to make it valid legally under the Law. Take advice from a property expert lawyer to make the process prompt and simple.

Adv. Priyanka Sampathy

Adv. Priyanka Sampathy

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Priyanka Sampathy is a legal consultant who prioritises ethical and professional conduct while striving to achieve desired outcomes. With over 15 years of independent practice, she has significant expertise in handling legal cases. Her exceptional communication skills enable her to express arguments in a clear and persuasive manner, both in writing and verbally, in Hindi, English, and Telugu.

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