Gift Deed

Gift Deed is a legal document that can be used to transfer movable or immovable property to family, relatives, friends or others voluntarily. The document is considered valid when the transfer does not seek money or any other value in exchange. The description of 'gift' as per Section 122 of the Transfer of Property Act, 1882 states a transfer of any existing movable or immovable property made voluntarily and without any consideration by a donor to the donee. The act also stipulates that the document should be registered as per the Indian Registration Act, 1908.

Types of Transferring a Property

As per Section 5 of Transfer of Property Act, 1882 a living person that includes an individual, company, association or a body of individuals can transfer property to other living persons, to himself or himself and others. The transfer of ownership can act immediately or in the future. The following are the ways for transferring a property:

Sale Deed
Mortgage
Lease
Will and
Gift Deed

Key Factors of a Valid Gift Deed

The following are the key factors for a valid gift deed

The donor must gift without any consideration
The donor and the donee must be alive when registering the deed
The donor should be above 18 years
Any properties mentioned in the gift deed shall exist and transferable
The property should be registered
The gift deed should be signed by both the donor and donee with witnesses
The gift deed should have been drafted as per the Indian Registration Act, 1908

Components to be included in the Gift Deed

Relationship between the donor and donee
Rights, power and executing authority by the donor
Details of the transfer properties with a registered name and address of the property
Details of the donee such as name, address and age

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Role of a Minor

As per Transfer of Property Act, 1882 a minor cannot draft a gift deed. However, a minor can receive the gift, but the minor can take over the property only after completing 18 years of age.

Registration of the Gift Deed

The gift deed should be registered as per Section 17 Registration Act, 1908 and Section 123 of the Transfer of Property Act. The gift deed shall be made on a stamp paper and to be registered at a sub-register office. The charges of the stamp paper depend on the charges stipulated by the state government. The gift deed shall be registered with the signature from the donor, donee and two witnesses. The registrar will attest the gift deed.

Taxation on Gifts

Property transferred by gift deeds is not taxable as per Section 56(2)(vii) of the Income Tax Act, 1961 if received by an individual, Hindu Undivided Family (HUF), from any relatives, marriage or at the time of death. If the donee does not qualify under the following or if the gift exceeds more than Rs.50,000, the gift shall be liable for taxation. Click here to read about Uttarkhand Property Registration

Types of Property

Immovable Property

Houses
Land and Goods
Mines, Roads and Canals

Movable Property

Cash, Jewels and Ornaments
Vehicles, Computers and Paintings
Machinery, Equipment and Materials

Revoking a Gift Deed

As per Section 126 of the Transfer of Property Act, a registered gift deed can be revoked. Hence adding a clause for revoking might provide suitable options. However, if the deed meets the following criteria, revoking might be considered

Registered unlawfully
If the deed is not registered
Registered to a minor
Provided non-existing properties
In case of transfer of funds or equivalent value for the gift deed
Donee passes away before acquiring the property
Gift deed does not meet the criteria of the Transfer of Property Act

Charges

Charges for registering and cancelling the gift deed is applicable. The rates for registering and cancelling the gift deed varies in each state.

Documents Required to Register the Gift Deed

Details of ID such as PAN, Aadhaar, Driving License of the donor and donee
Original and copy of the property documents
NOC if the property is an agricultural land
An affidavit stating the validity of the deed as regulated by 22A of the Registration Act, 1908