Gifting is one of the many mediums through which one can transfer their property to another person. To give this transaction legal backing, a gift deed must be drafted, executed and duly registered after the payment of applicable gift deed stamp duty and registration charges.
In India, property transfers as gifts are governed by the Transfer of Property Act, 1882 (“Act”). A gift of a property involves transferring the ownership of one’s property to another person by executing a gift deed. The gift deed is an instrument through which the immovable or movable property owner transfers his/her property to another person without consideration as a gift.
The person gifting his/her property is called the donor, and the person accepting the gift is the donee. The donor must voluntarily gift the property to the donee without considering the gift to be valid under the Act. The donee should accept the gift within the lifetime of the donor for the gift to be legally valid.
The gift of immovable property will be effective when the gift deed is registered with the appropriate Registrar or Sub-Registrar. The gift of movable property is effective when the gift deed is registered or by delivery of the property. When the gift deed is registered, the transfer of the property from the donor to the donee takes place immediately, and the parties need not go to court for its execution.
Registration of the gift deed is mandatory when the donor wishes to gift immovable property to the donee. A gift deed must be executed out of love and affection towards the donee without any consideration in return.
A Gift Deed: What is it?
A gift deed is an agreement that is used when a person wants to donate their property or money to someone else. With a deed of gift, a movable or immovable thing can be donated voluntarily, from the donor to the recipient. A gift deed allows the property owner to gift the property to anyone and prevents future disputes arising from inheritance claims. A registered deed of gift is also proof in itself and unlike a will, the transfer of property is instant and you will not have to go to court to execute the deed of gift thus a deed of gift also saves time.
Parties in a Gift Deed
There are two parties in a gift deed, i.e. donor and donee. The donor is the person who gifts his property, and the donee is the person to whom the property is gifted. The donor should have a sound mind and must be competent to enter into agreements at the time of making the gift.
A minor is incapable of gifting property as he/she is incapable of entering into agreements. However, the guardian of a minor can accept the gifts given to a minor on his/her behalf. The donor should make a gift without any consideration, i.e. the donor should not receive anything from the donee for making the gift.
Clauses in a Gift Deed
- Details of Donor and Donee – The gift deed should mention the name, address and relationship between the donor and donee.
- Consideration – The gift deed should mention that the donor is transferring the gift property out of love and affection towards the donee, and there is no consideration of any other type involved in the transfer.
- Voluntary Transfer – The gift deed should mention that the donor is voluntarily and freely transferring the ownership of the gift property to the donee. The transfer shall be free of any fear, coercion or threat.
- Ownership of Property – The gift deed should mention that the property is in existence and the donor is the absolute owner of the gift property, and the donor has delivered the possession of the gift property to the donee.
- Property Details – The gift deed should specify the detailed description of the gift property.
- Rights of the Donee – The gift deed should mention the rights of the donee. It includes the rights of the donee to enjoy the property peacefully and sell or mortgage or lease the property.
- Acceptance by Donee – The gift deed should mention that the donee accepts the gift of the property.
- Delivery – The gift deed should mention the intention of delivering the possession of the gift property, expressly or impliedly.
- Witnesses – The gift deed should mention the name and address of the witnesses. It should be signed and attested by at least two witnesses mandatorily.
- Revocation – The gift deed need not have a revocation clause of the gift property, but it is advisable to avoid any conflict in the future.
Properties that can be donated by gift deed
The donor can donate real estate and movable property to the recipient. Immovable property means land or any benefits arising from land or anything connected with land but does not include growing crops, standing timber, or grass. Real estate that is not considered immovable property is considered movable property.
However, the donor can only donate real estate that exists at the time the donation contract is drawn up. He cannot donate property that he expects or will acquire in the future. The donor can only donate property of which he is the rightful owner. The donor must own the gift property at the time of donation.
Gift Deed: Important Points to Mention
- There is no force or money involved: Be sure to add this consideration clause to the gift agreement. It must be stated that no money is exchanged and that the deed of gift is made purely out of love and affection, not money or coercion.
- When making a gift, you are the owner of your property: Only the owner can donate the property. If you are not the owner (title holder) of the property, you cannot gift it to someone else, even in advance.
- Describe the property: All information related to the property such as structure, type of property, address, area, location, etc. must be given in the format of the gift deed of the property.
- The donor and the recipient relationship: Some state governments may offer a stamp duty discount if the donor and recipient are blood relatives. Even otherwise, it is important to establish the relationship between the donor and the donee in the format of a real estate donation contract.
- List liabilities: If rights or obligations are associated with the gift, e.g. whether the recipient can sell or rent the property, etc., such clauses should be included in the gift contract.
- Delivery Clause: This on the deed of gift states the express or implied act of transfer of possession of the property.
- Revoking a gift: The donor can also clearly state whether he wishes the donee to adhere to the withdrawal clause on the gift agreement. Both the donor and the recipient must agree on this clause of the gift contract.
Registration of Gift Deed
Under Section 123 of the Transfer of Property Act, 1882, the gift of immovable property is valid when gifted through a registered gift deed signed by the donor and the donee and attested by two witnesses. The gift of movable property is valid when gifted under a registered gift deed or by giving delivery of the property to the donee.
For registration of the gift deed, the gift deed containing all the clauses (as mentioned above) must be drafted on stamp paper. The donor and donee should sign on all pages of the gift deed and must be attested by at least two witnesses. The donee must accept the gift in the lifetime of the donor and when the donor is of sound mind for it to be valid.
The value of the stamp paper on which the gift deed is executed varies from state to state. The gift deed executed on the stamp paper should be registered at the Registrar or Sub-Registrar’s office under whose jurisdiction the property to be gifted is situated. If the property is movable, the jurisdiction of the Registrar or Sub-Registrar’s office is the place where the donor resides.
Can I revoke the gift deed?
Once the property has been legally donated, it becomes a done and cannot be easily revoked. However, under Section 126 of the Transfer of Property Act 1882, revocation of a gift deed may be allowed in certain circumstances:
- If the gift contract was concluded due to coercion or fraud.
- If it is found that the reasons for the gift contract were immoral, illegal, or reprehensible.
- If it was agreed from the beginning that the donation contract is revocable under certain circumstances.
In such cases, even in the event of the donor’s death, his legal heirs can proceed to revoke the donation contract.
Tax Implications of Gift Deed
Gifts are taxed under Section 56(2)(x) of the Income Tax Act, 1961, after 1 April 2017. Under Section 56(2)(x)(a), when any person receives a sum of money exceeding Rs.50,000 without consideration as a gift, then the whole of the gift amount will be taxed in the hands of the donee under the head ‘Income from other sources’.
Under Section 56(2)(x)(b), when a person receives an immovable property without consideration as a gift, and the stamp duty value of the gift deed exceeds Rs.50,000, then the stamp duty value of the property is taxable in the hands of the donee.
However, if the property or amount is received from any of the following persons, then the taxation on the gift is exempted, and the donee will not be taxed:
- If the gift is received from relatives, or
- If it is received on the occasion of the marriage of the individual, or
- If it is received under a will or by way of inheritance, or
- If it is received in contemplation of the death of the donor, or
- If it is received from a local authority (defined in Explanation to Section 10(20) of the Income Tax Act), or
- If it is received from any fund, university, foundation, other educational institution, other medical institution, hospital, trust or institution referred under Section 10(23C) of the Income Tax Act, or
- If it is received from any trust or institution registered under Section 12A or 12AA, or
- If it is received by an individual (donee) from a trust established or created solely to benefit the individual’s relative.
Gift deed template
GIFT DEED
This Gift Deed is made and executed on this ………………. day of Month of ………… of the Year …………, at…………………………….
Between
<Name> son/daughter/wife of <Father’s/Husband’s name>, Age……Marital Status………, <Profession>, <Nationality>, Resident of ……………………………… Having Aadhar card No………………… hereinafter called the Donor of the one part.
AND
<Name> son/daughter/wife of <Father’s/Husband’s name>, Age……Marital Status………, <Professional Status>, <Nationality>, Resident of ……………………………… Having Aadhar card No………………… hereinafter called the Donee of the other part.
The expressions of the DONOR PARTY No. 1 and the DONEE PARTY NO.2 shall mean and include their respective heirs, successors, executors, nominees, assignees, administrators and legal representatives, etc.
AND WHEREAS the DONOR PARTY NO.1 is the owner and in possession of the property having been purchased/acquired vide registered sale deed as document No……………………………, Addl. Book-I—-, Vol. No…………pages …to…., on date ……………………duly regd. in the office of SR………,
AND WHEREAS the above PROPERTY, more particularly described in the schedule herein below, is free from all sorts of encumbrances such as liens, charges, claims, liabilities, acquisitions, injunctions or attachments from any Court of Law, gifts, mortgages, demands, notices, notifications, legal disputes, difference, prior sale and flaws, etc. etc. and the DONOR PARTY No.1 is fully entitled to dispose of the same.
AND WHEREAS the DONOR PARTY NO.1 has great love and affection for the DONEE PARTY No. 2 being HIS/HER _____________ <BLOOD RELATION>
AND WHEREAS the DONOR PARTY NO. 1 has agreed to Gift/Donate the property described in Schedule herein below UNTO the DONEE PARTY NO.2 and the DONEE PARTY NO.2 have also agreed to accept the same.
NOW THIS GIFT DEED WITNESSETH AS UNDER:
(1) That the DONOR PARTY NO.1 does hereby donate/gift the property__________________________________________________ __________, UNTO_____________________________________________________________ S/O, D/O, W/O _____________________________________________, R/O, ______________ on account of great love and affection for THEM being HIS/HER REAL ______________________ <Relation>
(2) The possession of the aforesaid PROPERTY UNDER DONATION/GIFT has been handed over/delivered to the DONEE PARTY NO2 by the DONOR PARTY NO.1
(3) That the DONEE PARTY NO. 2 has now become the absolute and exclusive Owner with all rights in the aforesaid PROPERTY UNDER DONATION/GIFT from today and shall also enjoy all rights of Ownership, etc., therein.
(4) The DONOR PARTY NO.1 has now been left with no right, title, interests or liens, etc. whatsoever of any sort/nature in the aforesaid PROPERTY UNDER DONATION/GIFT henceforth after the execution/ registration of this GIFT DEED. The property in question is free from acquisition by the Govt. nor by any other authority.
(5) That the DONEE PARTY NO.2 with HIS/ HER own funds shall get the PROPERTY UNDER DONATION/GIFT transferred/mutated in his favour in the records of Rights of Revenue Department on the basis of this GIFT DEED and Donor Party No. 1 hereby conveys his No Objection for the mutation of the property herein below mentioned under schedule, in the name of the Donee
(6) That the DONEE PARTY NO.2 has accepted the GIFT of the said PROPERTY UNDER DONATION / GIFT DEED and has also taken over the possession of the same from the DONOR PARTY NO.1.
(7) That the market value of the above-mentioned PROPERTY UNDER DONATION/GIFT has been assessed at Rs. ___________ (Rupees_______________ only), as per Notification published in Official Gazette, Series; _____ No. __________. Dated: ___________
(8) That all the expenses of the GIFT DEED such as Stamp Duty, Registration Fees etc. have been borne and paid by the DONOR PARTY NO 1 / DONEE PARTY NO 2.
(9) That all future taxes, cesses, rates or any other Govt. or Municipal dues and demands in respect of the above-mentioned PROPERTY UNDER DONATION/GIFT shall be borne and paid by the DONEE PARTY NO 2.
(10) That all the Title Deeds/papers including previous title deed (in originals) relating to the Gifted PROPERTY, herein below mentioned UNDER DONATION/GIFT have been handed over/delivered to the DONEE PARTY NO 2 by the DONOR PARTY NO 1
SCHEDULE
(Complete description of the Property)
East:
West:
North:
South:
In witness whereof, the parties have signed and affixed their signatures thumb mark on this Gift Deed after understanding the contents of the same on the day, month and year first above written in the presence of the below-mentioned witnesses.
Name and Signatures of Donor
Name
Signature
Right Thumb
Index Finger of Right Hand
Middle Finger of Right Hand
Forefinger of Right Hand
Little Finger of Right hand
Left Thumb
Index Finger of Left Hand
Middle Finger of Left Hand
Forefinger of Left Hand
Little Finger of Left hand
Photograph of Donor
Name and Signature of Donee
Name
Signature
Right Thumb
Index Finger of Right Hand
Middle Finger of Right Hand
Forefinger of Right Hand
Little Finger of Right hand
Left Thumb
Index Finger of Left Hand
Middle Finger of Left Hand
Forefinger of Left Hand
Little Finger of Left hand
Photograph of Donee
Witnesses
- Name, signature, address
- Name, signature, address
FAQs
What is the meaning of attestation of a gift deed by two witnesses?
Attestation of a gift deed by two witnesses means that the witnesses who sign the deed should have seen the donor signing the gift deed, and they should sign as witnesses in the presence of the donor and donee.
Who should pay stamp duty on the gift deed?
If the donee pays the stamp duty, it can amount to consideration (price) paid by the donee for the gift under the Transfer of Property Act. Since there cannot be a consideration in a gift deed, the deed may be considered void when the donee pays the stamp duty. So, the donor is responsible for paying the stamp duty.