Legal Agreements

Gift Deed Registration: Everything you Need to Know

Everyone likes to gift something or pass on their valuables to their loved ones. By way of gifting a person intentionally transfers certain rights in an asset to another person, without any consideration. While gifting a house property, a person needs to fulfil specific income tax and stamp duty implications. Gifting does not involve any significant procedure, but when it comes to legalizing immovable assets, gift deed is created.

What is Gift Deed?

• Gift Deed, as explained in Section 122 of the Transfer of Property Act, 1882, is a legal document that represents the transfer of gift from one person (donor) to another person (donee).
• A donor can transfer an existing movable or immovable property voluntarily to the donee through Gift Deeds.
• As per Section17 of the Registration Act, 1908^[1] it is mandatory to have a Gift Deed registered when you want to transfer immovable property. 
• According to the Indian Registration Act, 1908, the gifting property must be a registered instrument to pass on the ownership from a donor to a done. 
• To make an executed Gift Deeds valid, the donor must get it registered at the respective Sub-Registrar office.

What Type of Properties can be Gifted?

Following properties can be transferred in a Gift Deed:

What are the Steps Involved In Drafting a Gift Deed?

A gift deed shall include the following steps:

Step1. Drafting the Gift Deed

It is advisable to draft gift deed with the help of a lawyer. The legal document describes what is being transferred and to whom. A gift deed is a contract between a donor and the donee which defines a concurrent and reciprocal act of giving and taking. Valid gift deeds must be made by a person without any exchange of money and not under compulsion.

Step2- Acceptance

After the execution of the gift deed, the next step is acceptance. The donee must accept the gift during the lifetime of the donor. In case the done does not receive the gift, it is considered invalid. To validate acceptance, the donee can take possession of the property.

Step 3-Registration

As prescribed in section 123 of the Transfer of Property Act, to transfer title to the donee of immovable property, the property must be registered. Attestation of the documents by two witnesses during registration and post-registration process is mandatory, only then the title will be transferred.

How to register a Gift Deed?

The Registration Act, 1908 provides provisions for registration of a Gift Deeds. Necessary steps involved in the registration process are as follows:

1. An approved valuation expert to check the valuation of the property that is being gifted.
2. Payment of Stamp Duty and transfer Duty- Stamp Duty varies for men and women and from state to state.

What if the Donor/ Donee is a minor in the Gift Deed?

Legally speaking any person who owns the property can gift it to another person. An exception to this rule is in case the donor/donee is a minor. Minors are not eligible to enter into a contract; therefore, they cannot transfer the property as a gift. A gift deed made by a minor is invalid. In case the donee is a minor, then the natural guardian can accept the gift on his behalf. The natural guardian acts as a manager of the gifted property. The donee must either accept the burden or return the gift, once he is an adult.

What are the Important Clauses in a Gift Deed?

Gift Deed is an essential legal document, and certain things must be mentioned in a Gift Deed. Some of them are:

Consideration Clause

 It must be clearly mentioned in the Gift Deed that the transfer of property is being made out of love and affection, and there is no consideration received in return for the gift.

Possession of Property

The donor must be the titleholder of the immovable property he/she wants to gift. The gifting property must exist; a person cannot gift something which he will receive in the future.

Free Will 

The transfer of property should be free from any type of coercion, threat, fear or undue influence. The gift deed should clearly state that the transfer is voluntary. 

Information about Property

A detailed and specific description of the property is a must. The description should specify the address, structure, color, area, etc.

Relationship of the Donor and Donee

The relationship between donor and donee is essential to check whether they are blood relatives or not. Some state Governments offer a concession on stamp duty if gifts are made to blood relatives.

Rights and Liabilities

Under this clause, if any additional rights or liabilities like a further sale or leasing it further are attached to the gift, it must be mentioned.

Rights of Donee

The Gift Deed must mention Donee rights. It includes the donee rights to enjoy the property peacefully, to make changes to the property, and to receive rents or any profits that might arise from that property.

Delivery

The delivery clause includes the action, whether it be express or implied, which would confirm the delivery of the possession of the property. 

Revocation Clause

The revocation clause is not mandatory but is advisable. It helps in avoiding future complications. It is expressed not implied. Both the donor and donee agrees to this clause.

How To Revoke A Gift Deed?

A gift deed which is not based on fraud cannot be canceled. Once the gifting process is complete, it cannot be revoked unless the terms and conditions are provided in the deed to avoid future complications.

According to Section 126 of the Transfer of Property Act, 1882, a Gift Deeds can be revoked if it fulfils the following conditions:

• If there is a prior agreement between the donor and the donee stating that on the occurrence of certain events, the gift can be revoked.
• The event must be based on the mere will of the donor.
• The condition referred should not be illegal, immoral or repugnant to the property created under the gift.
• A valid reason must be provided based on which Gift Deed may be rescinded.

When is a Gift Deed Considered Eligible?

A gift deed is eligible if it satisfies the criteria given below:

• The gifting property can be movable or immovable property. In the case of immovable property, the registration must be completed in Sub-Registrar’s office.
• Gift can be tangible and immovable property, for example- cash, jeweller, immovable property, and so on.
• The donor must voluntarily gift the asset.
• The donee must accept the gift during the lifetime of the donor.
• Both the donor and donee should be alive during the gifting process. Hence transfer cannot be made to an unborn child.
• The donor must be above 18 years of age.

What is the stamp duty in each state at the time of executing a Gift Deed?

After drafting the gift deed, print it on stamp paper of appropriate value and get it registered at the registrar office. Stamp duty varies state by state. It can be paid either online or by purchasing stamp paper of mentioned cost.

Below are specified Stamp Duty and Charges in some of the major states in India:

State	Stamp Duty
Delhi	Women-4% of the market value of property. Man-6% of the market value of property.
Uttar Pradesh	6% for Women of the total value of the property. 7% for Man of the total value of the property
Karnataka	Transfer is to non-family members; it is 5.6% of the land value.  In case of family members, it can range from Rs.1000/- to 5000/- depending upon the property location.
Maharashtra	Family members – 3% In the case of other Relatives – 5% If Agricultural land or residential property is gifted, then it is Rs.200
Gujarat	4.9% of the total Market value of property.
West Bengal	Family Members-0.5% In other cases-6%. 1% surcharge above 40lac.
Tamil Nadu	Family Members-1% and  Other relatives-7%
Punjab	In case of blood relative-None  Else 6% of property value.
Rajasthan	Women-4% and 3% in case of SC/ST or BPL Man-5% Wife or daughter-1% In case close family members like son, daughter, in-laws, father, mother, grandson or granddaughter-2.5%

Documents required for Gift Deed registration

After the gift deed is signed, attested by witnesses and stamp duty is paid with the registration charges as per the state regulations. 

Some more documents need to be attached through the list is not exhaustive still few of them are mentioned below:

Contact Enterslice

Our professionals in Enterslice will help you in the end to end process of registration of Gift Deed.

Wrapping Up

When a property is transferred to another in the form of a Gift Deed, there is a shift in ownership that is protected by law. The Gift Deeds is a legal proof of transfer of property from the donor to the donee.  Once the property is transferred through the registered deed, the donor cannot claim back the property unless the donor proves that it was done under coercion, threat, undue influence or against the will. If the donee does not accept the gift, the donor cannot force the recipient to take it. The asset received under the Gift Deed can be sold unless attached by any precondition. Hence, the transfer of property by way of gift deeds is the best-suggested option available, and it is better to take the help of professionals to make the transfer.

Also, Read: A complete guide on gift tax in India – How are gifts taxed?