A gift deed is a written document. It shows that the property has been gifted by one person to another person. It is not compulsory for movable properties that there must be a gift deed while gifting any property; this is just a document that creates a valid record for that gift. Any movable or immovable property can be gifted to another person with the help of a gift deed. A gift deed is different from a Will of property because, in the gift of property, the possession of the property is transferred immediately.
What is a gift deed?
A gift deed is a legal document that is used by the Donor to transfer his existing movable or immovable property to his family members, relatives, friend or any other person with his free consent and without any consideration.
Section 122 of the transfer of property Act 1882 deals with the gift of property. As per section 122, the Donor can only gift the movable or immovable property which is existing at present time.
Parties under gift deed
There are mainly two parties under gift deed that are Donor and Donee:
A Donor is a person who transfers his movable or immovable property as a gift to another person. The Donor must be a sound mind person and he has the capacity to contract. Any person who is not of sound mind cannot give his property to another person.
A person who accepts the gifted property or a person to whom the Donor has transferred his property as a gift is called Donee. Any person can be the Donee. A person who is a minor or unsound mind, his guardian can accept the gift on behalf of the Donee.
Requirements for a valid gift deed
There are the following conditions that make a gift deed valid:
Without any consideration
The property which is being gifted by the Donor must be gifted without any consideration taken by the taken.
For example, Amit gifted his property to Sumit and took 5 lakh in return for that property. It will not be considered as a gifted property because he took the consideration for the same.
Donor and Donee must be alive
The Donor and the Donee under the gift deed must be available at the time of registering the deed. It means that if the Donor died, his property cannot be gifted also if the Donor is alive but the Donee has died before giving the possession. In that case, the property cannot be transferred as a gift.
The Donor should be above 18
The person who is going to give his property to another person must have attained the age of majority. However, the guardians of the minor Donee can accept the gift deed on the behalf of minor Donee.
The movable or immovable property which is being gifted by the Donor must be in existence at the time of making the gift deed.
The property must be registered in the name of the Donor. A Donor cannot give any property which is not registered in his name.
A gift deed must be signed by both parties with witnesses.
Drafted according to the Indian registration act
The gift deed of the property should be drafted according to the rules given under the Indian registration act 1908.
Types of gift deed
Let’s discuss the types of gift deeds based on their conditions and situations:
Inter Vivos gift
Inter Vivos gift is a gift made by a person who is alive. In such types of gifts, both the Donor and the Donee of the gifts are alive.
Causa Mortis gift
Causa Mortis gift is given by the Donor when he believes that he is going to die soon. This gift is not valid unless the owner of the property dies. After the death of the Donor of the property, the possession of the property is automatically transferred to Donee.
Outright gifts can be made for any property and these gifts are made without any restriction.
Any gift made by the Donor that imposes the burden or obligations on the Donee is called an onerous gift.
The gift made by the Donor to compensate the Donee for his services delivered to the Donor is called a remunerative gift.
Any gift made by the Donor in which he attached the revocation clauses that on such an event, the gift deed will be revoked, called a revocable gift.
Drafting of gift deed
It is not necessary for the movable property that a gifted property should be registered. But the gift deed is considered as a legal document that shows that the property has been gifted to the Donee and now he is eligible to use that property. To draft the gift deed, a person needs to follow these steps:
Name of the document
Write the name of the document as GIFT DEED.
Date of gift deed
After giving the name to the document, write the date with month and year in which you are going to transfer the ownership to the Donee.
Name and addresses
The next step is to write the full name, address, occupation, etc of the Donor and Donee.
The Donor can write that he is a person of sound mind and major. Also, he is making this gift deed with his free will.
Relationship with Donee
The owner of the property should describe the relationship with Donee. In some states, if they are blood relatives, the state government offers some concession on stamp duty.
Describe the property
You need to declare that you are the real owner of that property which is being gifted. After the declaration, you need to describe the necessary details like structure, type of property, address, area, location, etc.
If there are any liabilities and rights are attached to the gifted property, the Donor of the gift deed must write these liabilities. In this clause, he can also write the separate clause that the Donee of the property cannot sell or lease this property.
Delivery of possession
The Donee of the property should mention that he is delivering the possession of the property.
Although it is not important to add the revocation clause in the gift deed, if the Donee of the property want to add the revocation clause, then he can add this clause. Both the Donor and the Donee of the property must agree on this clause.
Details of witnesses
After adding all these clauses, you need to add the details of at least two witnesses with signatures.
Signature of parties
After filling in the details of witnesses, there should be a signature of the Donor and Donee.
Print on stamp paper
After the drafting of the gift deed, print it on the stamp paper of appropriate value. The value of stamp paper depends upon the state to state.
Registration of gift deed
Although there is no need to register the gift property if you really want to make a gift deed, it is valid proof that shows that this property has been gifted by one person to another person. To register the gift deed, it should be registered according to the rules given under section 17 of the registration act 1908 and section 123 of the transfer of property Act.
- It should be made on a stamp paper
- Registered at the sub-registrar office
- There should be the signature of the Donor, Donee and two other witnesses.
- The deed must be attested by the registrar
Documents required for gift deed
At the time of the registration of the gift deed, it should be attested by at least two witnesses and Donor and Donee. The Donor has to pay the stamp duty and registration charges as per the state regulation Act.
Documents from Donor
For the making of the gift deed, a Donor needs to carry some documents such as:
- Any identity proof- Aadhar card, driving license, passport, etc.
- PAN card
- Any document which shows the ownership of the Donor – mutation certificate, sale deed etc.
- NOC (in case of agricultural property)
- An affidavit of self-declaration
- Copy of Jamabandi
These are the documents that are required from the Donor at the time of the registration of gift deeds.
Documents from Donee
- Identity proof
- PAN card
- An affidavit of self-declaration
- If the Donor is a minor, then the document of the guardian.
Documents from witnesses
You need at least two witnesses at the time of registration of the gift deed.
- Identity proof
- PAN card
These are the documents that need to be carried at the time of registration of gift deeds. However, you might need other documents at the time of registration. So we suggest that you should definitely take the help of your local advocate who can guide you according to your state policies for the registration of gift deeds.
Validity of gift deed
If the Donor of the property transfers the property through a valid gift deed, then the gift deed is valid forever. After the gift deed, if the Donor and Donee died, the property will automatically go to the donee’s legal heirs. This gifted property will be considered as it is the self-acquired property of the Donee.
Tax on gift deed
As per section 56 (2) (vii) of the Income-Tax Act 1961, gifted property to family members or relatives is not taxable as long as the value of such gift does not exceed 50,000 Rupees. If the gifted property exceeds this value, it will be taxable.
Gift deed stamp duty
Although stamp duty varies from state to state, in a general rule of stamp duty on gift deeds, if the donor of immovable property gives the property as a gift to his family member, the stamp duty is 3% of the market value of that immovable property. But if the gift deed is for someone other than a family member, the stamp duty will be 5% of the market value of that immovable property.
Revocation of a gift deed
Once the gift deed is made, it cannot be revoked. But there are some conditions given under section 126 of the transfer of property Act in which the registered gift deed can be revoked by adding the clauses for revoking the will.
If the gift deed was registered unlawfully, then it can be revoked. For instance, if the gift deed was made without the free consent of the Donor, then a Donor can file litigation in the court of law for the revocation of the gift deed.
The gift deed is not registered
Where the gift deed is not registered and was just made orally, it becomes easy to revoke that gift.
Registered to minor
Where the gift deed is made to the minor without a guardian.
Where the gift deed is made for the property which does not exist in the present time.
Where the Donor has taken the consideration from the Donee.
Where the Donee in the gift deed has died before accepting that gifted property.
The gift deed doesn’t meet the criteria given under the transfer of property Act.
FAQ related to Gift deed
Can a gift deed property be sold?
Yes, the Donee of the property can sell the gifted property once the Donor has transferred the ownership of the property to him. But if the owner of the property has attached the conditions with the gift deed that the Donee cannot sell this property, in that case, the Donee of the property cannot sell the property.
Can a father make a gift of immovable property to his son?
A father cannot freely give his ancestral property to one son only. But if he has only one son, then he can make his property as a gift to his son.
Can a gift deed be challenged in court?
Yes, the Donor or the Donee or after them their legal heirs can challenge the gift deed if it was made under coercion or any other wrongful way.
A gift deed is a legal document that shows that the owner of the property has given his property to the Donee with his free consent. The Donor in the gift can also attach the liabilities with the gifted property and once the Donee of the property has accepted the gift deed, he becomes liable to pay the debts attached to that property.
The acceptance of the gift deed is more important because if the Donee under the gift deed refuses to take the gifted property, the Donor of the gift deed cannot force him to accept the same.
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