The voluntary transfer of property ownership through a gift is recorded officially in a document called a Gift Deed.
- There are several law provisions applied during the making of a Gift Deed, and there are several documents required for a Gift Deed.
- The ownership of the title of one’s property is transferred to another through a document known as a Gift Deed. The property involved can be movable or immovable and has several provisions under the law. Several documents are required for Gift Deed registration with the Sub-Registrar as per law provisions.
- No consideration or compensation is received by the donor for this gifted property/land as it is gifted out of love and affection to family or non-family members. The documents required for a Gift Deed can also include other property-related papers as advised by the competent authority.
- Many important documents are required for Gift Deed, which includes identity proof. The documents required for the Gift Deed will be discussed in this blog.
What is a Gift Deed?
A Gift Deed is a formal document that enables the owner of any movable or immovable property to transfer the ownership to any other person who can be a family or non-family member.
- It is a voluntary transfer and demands no consideration in return.
- The person who gifts is called the “donor,” and the individual who receives the gift is called the “donee.” The deed of the gift must be signed by both parties, and at least two witnesses must validate it. The documents required for Gift Deeds are legally verified.
- There are tax implications and stamp duty charges which need to be cleared while receiving any property gift and these charges are different for every state.
- No restrictions are imposed on gifting, and some gifts are an exemption from tax (wedding gifts, etc.), but the documents required for Gift Deed must be registered and authorized even for wedding gifts.
Types of Property that can be Gifted
The properties have to be under the law criterion to be gifted. These are:
- Any movable or immovable property can be a gift.
- It must be a transferable property.
- The donor should be the sole legal owner of the property.
- The property should not be of any future occurrence.
- Tangible property is allowed to be gifted.
Parties involved in a Gift Deed
The parties involved in the Deed of Gift are two, i.e., the donor and the donee.
- The person who voluntarily gifts the property is the donor, and the person who is on the receiving end is the donee. The documents required for Gift Deed must have the names and addresses of both parties.
- The donor should be of sound mind and must not be under any kind of pressure to gift property. The documents required for Gift Deed must be attested by both parties and thoroughly checked to avoid confusion.
- Both parties can opt for legal consultancy services to avoid any kind of complication and to clarify the matter.
Minor cannot enter into agreements, so they cannot gift any property, and their name cannot be mentioned in the documents required for Gift Deed.
The essential factor while making a Gift Deed
There are some key factors in the process of making a Gift Deed. They are as follows:
- The property which is being gifted should be without any compensation in return.
- Both parties should be present when registering a deed, and the documents required for Gift Deed must be signed by them in the registration process.
- The donor and donee must be above 18 years of age to register.
- The property mentioned in the Gift Deed must be tangible and existing property.
- The donor should be the sole owner of the property, which means they must have the title of ownership and must have every copy of the documents required for Gift Deed registration.
- The property should be registered property, and the property papers can be given with the documents required for Gift Deed.
- It should be checked by both parties and registered under the Indian Registration Act 1908.
Documents Required for Gift Deed
There are some documents required for Gift Deed registration, such as:
- The identity and proof of both the parties, such as PAN, Aadhar card, Driving license, etc., are one of the important documents required for Gift Deed registration.
- The copy and originals of the documents required for Gift Deed registration as implied by law.
- NOC is also one of the documents required for a Gift Deed if the property involved is agricultural land.
- An affidavit that states the validity of the deed, which is regulated by 22A of the Registration Act, 1908.
- Encumbrance certificate.
Stamp Duty and Tax Implications on Gift Deed
Certain tax implications and stamp duty are charged, and it is different for each state. There is also an allowance difference for men and women, family and non-family members, etc.
- The stamp duty is paid by the donor as it’s a gift without consideration, and it amounts to 3% to 7% of the total value of the property.
- Close relatives can receive a concession.
- The Gift Deed can become void if the donee has to pay stamp duty. Income tax is imposed on gifts whose value exceeds Rs 50,000 without consideration. If such happens, the whole amount of tax is handled by the donee, and it comes under the heading “Income from other sources.”
Can Gift Deeds be revoked?
Under Section 126 of the Transfer of Property Act, a Gift Deed might be revoked in some cases, and registration may get canceled if traces of coercion or forgery are found.
- It may be revoked if the documents required for Gift Deed or the deed itself are registered unlawfully.
- It may get canceled if the deed is not registered.
The blog deals with the important documents required for the Gift Deed. The Gift Deed is made to transfer the ownership voluntarily, and it is registered with the sub-registrar of the concerned state. The registration is mandatory under the law and needs to be specified. An individual must seek a legal consultancy service if they are doing it for the first time or have any difficulty with their queries.