Section 1
What is a Gift Deed?
A Gift Deed is a legal document that formally transfers ownership of property (movable or immovable) from one person (the donor) to another (the donee) without any monetary consideration. It is a voluntary and gratuitous transfer of property.
Gift Deeds are governed by the Transfer of Property Act, 1882 (Sections 122 to 129) and must be registered under the Registration Act, 1908 if the property is immovable.
Key Points About Gift Deed
- Governing Law: Transfer of Property Act, 1882 (Sections 122-129)
- Nature: Voluntary transfer without consideration
- Parties: Donor (giver) and Donee (receiver)
- Registration: Mandatory for immovable property
- Tax Implications: Subject to Income Tax Act provisions
Key Fact
Under Section 122 of the Transfer of Property Act, a gift is defined as the transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person to another, and accepted by or on behalf of the donee. Transfer of Property Act
Section 2
Essential Elements of a Gift Deed
Donor: The person making the gift (must be competent to contract)
Donee: The person receiving the gift (must be competent to receive)
Property Description: Clear description of the property being gifted
No Consideration: Must be made without any monetary consideration
Voluntary Transfer: Must be made voluntarily and with free consent
Acceptance: Gift must be accepted by the donee (or on their behalf)
Registration: Mandatory for immovable property
Execution: Signed by the donor and witnessed by two witnesses
Delivery: Physical delivery of possession (for movable property)
Who Can Make a Gift?
- Competent Person: Must be of sound mind and major (18+ years).
- Property Rights: Must have clear title to the property being gifted.
- No Legal Bar: Should not be prohibited by any law from making the gift.
Who Can Receive a Gift?
- Any Person: Can be a relative, friend, or even a stranger.
- Minor: Can receive a gift through a guardian.
- Institutions: Trusts, societies, and religious institutions can receive gifts.
Important: A gift of immovable property is not valid unless it is registered under the Registration Act, 1908. Unregistered gift deeds do not confer title to the donee.
Registration Act
Section 3
Gift Deed Registration Process
Follow these steps to register a Gift Deed for immovable property:
- Draft the Gift Deed: Prepare the Gift Deed on stamp paper of appropriate value.
- Pay Stamp Duty: Pay the stamp duty as per the state government rates.
- Pay Registration Fee: Pay the registration fee (typically 1-2% of the property value).
- Visit Sub-Registrar: Both the donor and donee must appear before the Sub-Registrar.
- Submit Documents: Submit the Gift Deed with all required documents.
- Verification: Sub-Registrar verifies the identity of parties and witnesses.
- Sign Register: Both parties sign the registration book.
- Receive Acknowledgment: Get the acknowledgment receipt.
- Collect Registered Deed: Collect the registered Gift Deed after processing.
- Update Records: Get mutation/katha updated in municipal records.
Tip: Registration must be done within
4 months from the date of execution. Late registration is possible with payment of penalty (up to 4 months additional).
Registration Act - Timelines
Section 4
Complete Gift Deed Format with Preview
Below is a complete format of a Gift Deed with a preview of how it should appear. This is a sample Gift Deed for immovable property.
Note on the Format
This is a sample format for a Gift Deed. The actual content will vary based on the facts of each case. Always consult a lawyer for proper drafting. The format above is editable for your convenience.
Section 5
Stamp Duty & Registration Fees
Stamp Duty Rates (Indicative)
| State |
Stamp Duty (Gift to Relative) |
Stamp Duty (Gift to Non-Relative) |
Registration Fee |
| Maharashtra |
2-3% |
5-7% |
1% |
| Delhi |
2% |
5% |
1% |
| Karnataka |
2% |
5% |
1% |
| Tamil Nadu |
2% |
5% |
1% |
| Telangana |
2% |
5% |
1% |
| Uttar Pradesh |
2% |
5% |
1% |
Note: Stamp duty rates vary by state, city, and whether the donee is a relative or non-relative. These rates are indicative and subject to change. Always check the current rates with the local sub-registrar's office.
Telangana Registration Department
Documents Required for Registration
- Original Gift Deed on stamp paper
- Identity proof of Donor and Donee (Aadhaar, PAN, Voter ID, Passport)
- Address proof of Donor and Donee
- Property documents (Sale Deed, Title Deed, Encumbrance Certificate)
- Property tax receipts
- Mutation records
- Passport-size photographs
- Any other documents as required by the sub-registrar
Section 6
Tax Implications of Gift Deed
Income Tax Act Provisions
- Section 56(2)(x): Any sum of money or property received without consideration is taxable as "Income from Other Sources".
- Exemptions: Gifts received from relatives (as defined under the Act) are fully exempt.
- Relative Definition: Includes spouse, siblings, parents, grandparents, children, grandchildren, and their spouses.
- Threshold: For non-relatives, gifts exceeding ₹50,000 in a financial year are taxable.
- Valuation: For immovable property, the stamp duty value is considered for taxation.
- Capital Gains: When the donee sells the property, capital gains tax applies based on the cost of acquisition (which is the value at the time of gift).
Key Tax Points
- For Donor: No tax liability on making a gift.
- For Donee: Tax liability arises only if the gift exceeds ₹50,000 from a non-relative.
- Exemption: Gifts on the occasion of marriage are fully exempt.
- Documentation: Keep proper records for tax filing purposes.
Source: Income Tax Department
Section 7
For NRIs - Gift Deed Considerations
NRIs face special considerations when gifting property in India:
- FEMA Compliance: Gift of property to NRIs is governed by FEMA regulations.
- Acceptance: Gift of agricultural land to NRIs is generally not allowed.
- Repatriation: Funds from sale of gifted property are subject to repatriation limits.
- Tax Implications: NRIs are subject to tax on gifts exceeding ₹50,000 from non-relatives.
- Power of Attorney: If not physically present, execute through a Special Power of Attorney.
- Registration: Gift Deed must be registered at the sub-registrar's office in India.
Important: NRIs should consult a chartered accountant and a lawyer for specific advice on gifting property in India. FEMA regulations and tax implications must be carefully considered.
RBI - FEMA Guidelines
Section 9
Frequently Asked Questions
1. What is a Gift Deed?
A Gift Deed is a legal document that formally transfers ownership of property (movable or immovable) from one person (the donor) to another (the donee) without any monetary consideration. It is governed by the Transfer of Property Act, 1882.
2. Is registration of a Gift Deed mandatory?
Yes, for immovable property, registration of a Gift Deed is mandatory under Section 17 of the Registration Act, 1908. An unregistered Gift Deed does not confer title to the donee.
3. Who can make a gift?
Any person who is of sound mind, major (18+ years), and has a clear title to the property can make a gift. The person should not be prohibited by any law from making the gift.
4. Can a gift be revoked?
A gift can be revoked only under certain circumstances, such as fraud, undue influence, or if the gift was made subject to a condition that has not been fulfilled. However, a completed gift (registered and delivered) cannot be easily revoked.
5. What is the stamp duty for a Gift Deed?
Stamp duty varies by state and whether the donee is a relative or non-relative. Generally, it is 2-3% for gifts to relatives and 5-7% for gifts to non-relatives. Check with the local sub-registrar for current rates.
6. What are the tax implications of a Gift Deed?
Gifts from relatives are fully exempt under Section 56(2)(x). Gifts from non-relatives exceeding ₹50,000 in a financial year are taxable as "Income from Other Sources". The donee may also be liable to capital gains tax on sale of the gifted property.
7. Can NRIs gift property in India?
Yes, NRIs can gift property in India. However, FEMA regulations apply, and gifts of agricultural land to NRIs are generally not allowed. NRIs should consult a lawyer and CA for specific advice.
8. What documents are required for Gift Deed registration?
Required documents include: Gift Deed on stamp paper, identity proof of donor and donee, address proof, property documents (sale deed, title deed, EC), property tax receipts, and passport-size photographs.
9. What is the time limit for registering a Gift Deed?
A Gift Deed must be registered within 4 months from the date of execution. Late registration is possible with payment of penalty (up to 4 months additional).
10. What is the difference between a Gift Deed and a Will?
A Gift Deed transfers property during the lifetime of the donor and takes immediate effect. A Will transfers property after the death of the testator and takes effect after probate. A Gift Deed requires registration, while a Will does not (though registration is recommended).