Gift Deed

A Gift Deed is a legal document used to transfer ownership of assets or property from one person (the donor) to another (the donee) without any exchange of money. It is commonly used for transferring property, money, or assets like jewelry, vehicles, or even stocks. The transfer is made voluntarily and without any coercion, and it comes into effect once the deed is executed and registered.

Key Features of a Gift Deed:

1. Voluntary Transfer:

   • A gift is always voluntary and made without any consideration (payment or money). The donor must not receive anything in return.

2. Legal Document:

   • The gift deed must be executed on a non-judicial stamp paper, with the value of the stamp paper depending on the value of the gift.

3. Types of Gifts:

   • Gifts can be in the form of movable property (cash, jewelry, stocks, etc.) or immovable property (land, house, etc.).

4. Registration of Gift Deed:

   • A gift deed for immovable property (land, house, etc.) needs to be registered at the local sub-registrar office under the Registration Act, 1908.
   • Movable property does not require registration but should be documented properly to prove the transfer.

5. Donor and Donee:

   • The donor is the person making the gift, and the donee is the person receiving it.
   • There is no restriction on who can be a donee, though the gift must not be made to a person who cannot accept it legally (e.g., a minor or person of unsound mind).

6. Revocation of Gift:

   • A gift, once executed, is generally irrevocable. However, under certain circumstances, a donor can revoke the gift if it is done within a legal framework and in cases of fraud, coercion, or if the donee violates the terms of the gift.

Legal Requirements for a Gift Deed in India:

1. Donor’s Capacity:

   • The donor must be mentally competent to make the gift, and must be of legal age (18 years and above).
   • The donor should have the right to dispose of the property being gifted.

2. Donee’s Acceptance:

   • The donee must accept the gift for it to be valid. For immovable property, the acceptance is usually implied by the execution of the deed, but for movable property, physical possession of the gift may also imply acceptance.

3. Witnesses:

   • The gift deed must be signed by at least two witnesses, who will attest to the authenticity of the gift transaction.

4. Stamp Paper:

   • The deed must be executed on a non-judicial stamp paper, with stamp duty varying depending on the state and value of the gift.
     • In the case of immovable property, the stamp duty may range from 1% to 7% of the property’s value (varies by state).

Tax Implications of Gift Deed in India:

1. Gift Tax Act:

   • The Gift Tax Act, 1958 was abolished in 1998. However, the transfer of gifts is still subject to Income Tax laws under Section 56(2) of the Income Tax Act, 1961.

2. Income Tax on Gifts:

   • If the value of the gift exceeds ₹50,000 (in aggregate) in a year, the donee may be liable to pay tax on the gift received, depending on the nature of the gift.
   • Exemptions: Gifts received from relatives (parents, siblings, spouse, etc.) are exempt from taxation, provided the gift is made without any consideration.

3. Immovable Property Gifts:

   • Gifts of immovable property are subject to stamp duty and registration charges based on the market value of the property, along with income tax implications if the property is sold later.

Steps Involved in Executing a Gift Deed:

1. Drafting the Gift Deed:

   • The deed should clearly mention the donor, donee, and the details of the gift (property, cash, etc.), including its description and value.

2. Execution of the Deed:

   • The donor must sign the gift deed in the presence of at least two witnesses.

3. Registration (for Immovable Property):

   • The deed must be registered at the local sub-registrar office if the gift is related to immovable property. The process involves submitting the signed deed along with identity proof, address proof, and payment of registration fees.

4. Handing Over Possession (if applicable):

   • For movable property, the donor must hand over physical possession of the gift to the donee. For immovable property, possession is implied once the gift deed is registered.

Benefits of Gift Deed:

• Tax-Free Gifts: Gifts received from close relatives are generally exempt from taxes.
• Avoids Disputes: A well-executed gift deed helps avoid any future disputes regarding the ownership of the gifted property.
• Estate Planning: Gift deeds are an effective tool for estate planning, ensuring smooth transfer of assets to heirs.

How We Can Help:

We assist in drafting and registering gift deeds, ensuring that the process is legally sound, transparent, and free from complications. Whether it’s a gift of immovable or movable property, we guide you through the legal procedures and ensure all documentation is in place.