Giving property to a loved one is widely done in India, especially inside families. The best legal and tax-friendly way to hand over your property is through a gift deed. Giving any sort of immovable property, be it your house or some land, to those close to you isn’t a simple task. You should, therefore, understand what a gift deed property means.
In this article, we’ll break down the gift deed meaning, its legal standing, tax implications, and the property gift deed rules in India, helping you make an informed decision.
What is a Gift Deed?
A property owner (the donor) gives ownership of immovable property directly to another person (the donee) without receiving any money.Such a transfer requires love, affection or goodwill and becomes a legal process once the other parent accepts and registers it.
Gift Deed vs. Sale Deed vs. Will
- Gift Deed: Immediate transfer of ownership without money involved.
- Sale Deed: Transfer of property for a monetary consideration.
- Will: Transfer of property after the owner’s death, which can be contested.
Unlike a will, a gift deed makes the transfer of property irrevocable and immediate, because a will will not be carried out until after the testator dies and is open to being challenged.
Parties Involved in a Gift Deed
There are two main parties in a gift deed:
- Donor: The person who owns the property and wishes to gift it.
- Donee: The person receiving the property.
The donee must accept the gift during the donor’s lifetime for the deed to be valid. You can express acceptance either explicitly or implicitly, but you must document it.
Key Features of a Valid Gift Deed
To ensure the gift deed holds legal validity, the following features are essential:
1. Voluntary Transfer Without Consideration
The donor must transfer the property willingly, without receiving any payment in return. Any coercion or pressure can make the deed invalid.
2. Acceptance by the Donee
The donee must accept the gift for the deed to be legally valid. This acceptance must happen during the donor’s lifetime.
3. Registered Under the Indian Registration Act, 1908
According to Section 123 of the Transfer of Property Act, 1882, and the Registration Act, 1908, a gift deed of immovable property must be registered with the sub-registrar. Oral gifts are not valid for immovable property.
4. Executed on a Proper Stamp Paper
The deed must be printed on the required value of stamp paper, depending on the state laws.
Stamp Duty and Registration Charges
One of the biggest financial considerations in gift deed transactions is the stamp duty and registration charges.
Charges Vary by State
Different states in India have different stamp duty rates. For example:
- In Delhi, gifting property to a family member attracts only 1% stamp duty.
- In Maharashtra, the stamp duty is ₹200 for specified relatives but can be higher for others.
- In Haryana, stamp duty varies between 3% and 8% depending on gender and relationship.
Relationship Matters
Lower rates are often applicable when the gift is made to blood relatives such as parents, children, spouse, or siblings. Gifts to non-relatives usually attract higher stamp duties.
Additional Charges
Registration fees (typically 1% of property value) and surcharges may also apply.
Tip: Always check the latest rates in your state before proceeding.
Tax Implications of a Gift Deed
Many people wonder about the gift deed tax implications. Here’s what you need to know:
Gifts to Relatives – Tax-Free
Under Section 56(2)(x) of the Income Tax Act, 1961, if a property is gifted to a relative, the gift is not taxable. Relatives include:
- Spouse
- Brother or sister
- Brother or sister of the spouse
- Brother or sister of either parent
- Lineal ascendant or descendant (parents, children, grandparents, grandchildren)
Gifts to Non-Relatives – May Be Taxable
If the property is gifted to a non-relative, and the stamp duty value exceeds ₹50,000, it becomes taxable in the hands of the donee as “income from other sources.”
Gift from Non-Resident Indian (NRI)
Gift received from an NRI may have different implications under FEMA regulations, and income tax laws still apply.
Revocation or Cancellation of Gift Deed
Generally, a gift deed, once registered, cannot be revoked unilaterally. However, cancellation is possible under the following circumstances:
1. By Mutual Consent
Both donor and donee must agree in writing and register the cancellation deed.
2. By Court Order
If someone obtains a gift through fraud, misrepresentation, undue influence, or coercion, the donor can ask the court to revoke it.
3. Conditional Gift
If the donor explicitly states a condition in the gift deed and the recipient violates it, the donor may revoke the gift.
Pros and Cons of Using a Gift Deed to Transfer Property
Pros
- Legally Binding: Once registered, ownership rights are clear.
- Tax Benefit: Gifts to relatives are exempt from tax.
- Quick Transfer: No need for court approval like in probate of a will.
- Avoids Disputes: Clear documentation helps prevent future disputes.
Cons
- Irrevocable: Once executed, the donor cannot take back the property unless the court intervenes.
- Stamp Duty Costs: Even though it’s a gift, stamp duty and registration charges apply.
- Potential Family Disputes: Other family members may contest the transfer if they feel left out.
A legal transfer of property within a family can be accomplished well using a gift deed. Close attention guarantees that you get your finances clearer, quicker and with fewer taxes. Nevertheless, it’s crucial to know about the legal, financial and emotional aspects before moving forward.
If you plan to transfer property through a gift deed, always have a qualified legal expert draft the deed, verify the stamp duty obligations, and register it properly. Consulting a lawyer helps you avoid future complications and ensures you carry out your intentions smoothly.
Frequently Asked Questions
What is a gift deed property?
A gift deed property refers to immovable property (like land, house, or apartment) that is transferred from one person to another without any monetary exchange, using a legal document known as a gift deed.Add image
What is the meaning of a gift deed in India?
A donor voluntarily transfers ownership of a property to a donee through a gift deed, motivated by love and affection, without receiving any payment.
Is registration of gift deed mandatory in India?
Yes, registration of a gift deed is mandatory under the Indian Registration Act, 1908 for immovable property. Without registration, the gift deed is not legally valid.
What are the stamp duty charges on a gift deed in India?
Stamp duty on gift deed varies by state and the relationship between the donor and donee. For example, gifts to family members may attract lower stamp duty, while gifts to non-relatives can have higher charges. Always check your state’s current rates.
Are gift deed properties taxable in India?
Gift deed tax implications depend on the relationship:
Gifts to specified relatives are tax-exempt.
Gifts to non-relatives are taxable if the value exceeds ₹50,000, under Section 56(2)(x) of the Income Tax Act.
Can a gift deed be revoked or cancelled?
You cannot revoke a registered gift deed unilaterally. The donor and donee must mutually agree to cancel it, or a court can order cancellation if someone obtained it through fraud, coercion, or misrepresentation.
How to transfer property through gift deed in India?
To transfer property via gift deed:
Draft the deed with legal help.
Print it on appropriate stamp paper.
Register it at the sub-registrar’s office.
Ensure the donee accepts the gift during the donor’s lifetime.
Who can gift property under a gift deed?
A legally competent property owner over 18 years of age can voluntarily gift property to another person without any consideration
