Gift Deed- An Overview
A gift deed is a legal document which is governed by the provisions of the Registration Act, 1908 and the Transfer of Property Act. A gift deed is utilised by a person when some form of gift has to be transferred from one party to another party. Section 122 of the Transfer of Property Act, 1822 contains the provisions for a gift deed.
There are two parties in a gift deed, the donor and the donee. Any form of movable and immovable property can be transferred from the donor to the donee by way of a gift. As per the rules related to the Indian Contract Act, 1872- a gift would only be valid if it is given with natural love and affection from one party to another party. Here the principles of normal contract law would be applicable.
As per section 17 of the Registration Act, 1908 getting a gift deed registered is mandatory as per the requirements. This would be required if there is a transfer of movable property and immovable property in India.
What are the properties that can be gifted by making a deed?
The following properties can be lawfully handed as per the requirements of a gift deed:
- Any form of movable or immovable property that satisfies the requirements of the act.
- Any form of property which is tangible in nature. A tangible property is something which has some form of physical presence.
- A property which can be transferred under the provisions of the transfer of property act.
- Any property which is existing and present as per the requirements of the act.
Which parties can be the donor and the donee in India?
First and foremost, it is crucial to understand the meaning and difference between a donor and a donee. A donor can transfer the property. A donee is an individual or company that has the right to receive the property through valid transfer. Such valid transfer is carried out through the requirements of a gift deed.
The following individuals would be capable of being a donor and donee as per the requirements of the act.
A minor cannot be a donor as there is some form of transfer of property from one individual to another. However, a Minor can be classified as a donee. A minor can be the donee as long as the legal guardian of the minor would accept the gift deed from the donor.
- Sound Mind
An individual can be a donor or a donee if the individual is of the capacity of having a sound mind. If the individual is of an unsound mind, then he cannot be a donor or a donee.
Any person or individual who is considered an insolvent cannot be a donor or donee as per the respective provisions of the act.
Important clauses which have to be present in the Gift Deed
There are specific clauses or provisions which have to be present in the gift deed. Such clauses would make the gift deed valid as per the requirements of the respective acts:
1. Consideration Clause
3. Rights and Liabilities
4. Details of the Property
5. Details of Possession of Property
6. Information on the Donor and the Donee
7. Clause related to Delivery
8. Rights and Liabilities of the Donee
9. Revocation Clause
- Consideration Clause
This is the most important clause as per the requirements of a gift deed. Such clause must ensure that there is no form of consideration or money involved as per the requirements of the gift deed. Such transfer must be based on the principles of love and affection between the parties. If there is some form of consideration between the parties, then such transfer would not be considered as a gift. This would be irrespective of the amount of consideration.
Such consent must be free from any form of external force such as coercion, undue influence, misrepresentation or threat. The consent must be free from any external factors.
- Rights and Liabilities
If there are any form of respective rights and liabilities related to the gift deed, then the same must be mentioned in the gift deed.
- Details of the Property
Here the information related to the property must be mentioned. Elaborate information on the property must be provided such as the area, premises and nature of the property which is provided by the way of a gift.
- Details of Possession of Property
Such details will include the information such as the name of the donor or the true possession of the property by the donor. The donor also must be willing to provide the property as a gift to the donee. The property must be in rightful possession of the donor as any form of property which is secured in the future would not be valid and capable as being transferred by means of a gift deed.
- Information on the Donor and Donee
This clause would have information on the donor and the donee. Important information such as blood relatives must be mentioned in the gift deed. Such information would provide some form of concession for the creator of the gift deed. In some states, there is some form of concession if such information is provided in the gift deed.
- Clause related to Delivery
Usually this clause would state, when the property would be transferred from the donor to the donee. Such clause would be stated either expressly or impliedly related to the delivery of the gift.
- Rights and Liabilities of the Donee
In this clause, the respective rights of the donee must be mentioned. Such rights would be the exclusive right of the donee to enjoy the property and other such provisions related to transfer of property from one party to another.
- Revocation Clause
This clause has to be included in the gift deed, to avoid any form of future confusions. Both the donor and donee have to make sure that such clause is present in the gift deed to avoid any form of future complications.
Procedure for Drafting and Registering a Gift Deed
- First and Foremost, the date and place of execution of the gift deed must be mentioned. With this all information of the donor and the donee must be mentioned in the deed. After this all information such as relationship between the donor and the donee, address and other relevant information must be provided. The description of the property must also be provided. Such information must be included in the gift deed in presence of two witnesses. Such gift deed must be executed and signed by the donor and donee.
- After drafting the gift deed, the same must be copied on the stamp paper as per the required value. For the value of stamp paper. Such has to be determined in the state where the gift deed is prepared.
- In the last step, the applicant has to go for registering the gift deed with the registrar or the sub-registrar.
What are the documents required for Gift Deed Registration
Once the gift deed is prepared, the same must be attested by the witnesses. After such step is carried out the applicant would have to pay stamp duty of appropriate value.
After such process is carried out, the applicant has to submit the following documents:
- Aadhaar card of the party
- Identification documents such as Passport or any other documents
- PAN Card of the parties- to carry out execution of the gift deed
- Original Document- Gift Deed
- Sale Deed or such document to prove the donor is the original owner
- Witnesses – Two witnesses have to be present
- Document or Information certifying the value of the property
- Encumbrance Certificate
- Any other information related to the property
- The documents required for the gift deed may vary on a state to state basis.