All You Need To Know About Gift Deed in India

What is a Gift?

If one wants to transfer land/building to a loved one without any consideration then it is possible and for this purpose a gift deed is to be executed and registered. Any Property that is transferable can be gifted. Donor is the person giving the gift and Donee is the person receiving the gift. A gift deed is a document which is a record of a gift given by a Donor to Donee. For immovable property such as land/building for a gift to be valid it has to be registered as per the Transfer of Property Act. Points to keep in mind before Gifting:

Before giving a gift there are certain aspects to bear in mind:

• A Gift deed will be valid only if it is given out of love and affection and out of the Donor’s own volition (out of free will, without co-ercion, fear)
• The gift should be without monetary exchange.
• The Donor must be the rightful owner of the property being gifted and also the property has to be currently in possession of the Donor and not a future property
• The gift should not be for tax evasion or for any illegal activity and the Donor should be solvent at the time of making the gift.
• A Minor cannot be a Donor but a guardian to a minor can accept a gift on behalf of a Minor.
• The Donee should confirm their acceptance of the gift by signing the Gift Deed for the gift to be valid.
• The gift deed has to be registered. A gift once done cannot be revoked.

Gift Deed:

A Gift deed details the property to be transferred and specifies the details of the Donor and Donee, particulars of the property such as dimensions, area and boundaries. It also contains the details of the parent document, that is, how the donor acquired rightful ownership to the property. A statement specifying the market value of the property. In case of Property – a gift deed will be valid only if it is accepted by the Donee, that is, the Donee has to sign the Gift Deed to confirm their acceptance. The market value of the property being gifted is determined by approved Valuation Experts. It is on this value that the Stamp Duty and Registration Fee for a Gift Deed is paid.

Registration of Gift Deed:

For a gift to be valid it is mandatory for the Gift Deed to be registered at the Concerned Registrar’s Office. The following documents are required while registering a Gift Deed -  Original Gift Deed, ID and Address Proofs, PAN and Aadhaar, Parent Document (Title Document of the Donor), Encumbrance Certificate upto the date of registration.

Stamp duty and Registration Fee for a gift deed varies between states around 2% to 5%  As on date of writing this article.

Income Tax Implications and Charges and Incomes from Gifted Property: It is advisable to heed advice of an Auditor to understand the income tax implications of a gift as per The Income Tax Act for both donor and donee. Any charges (eg. Utility bills) liable to be paid on the gifted property post registration of the gift deed will have to borne by the Done (Except for minor who shall not be liable till they attain majority, post which they can choose to accept the gift and associated liabilities), similarly, all incomes associated with the gifted property will go to the Done post registration of the gift Deed.