GIFT DEED

INTRODUCTION:
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.

LEGAL PROVISIONS:
The Section 17 of the Registration Act of 1908 states that, individuals must
validate gift deed through registration with sub-registrar. Furthermore, section
123 of the Act indicates that an unregistered gift deed shall be deemed invalid.
Apart from that, the registered gift deed holder shall be liable to apply for the
property’s mutation. The mutation process is an essential part of the property
sector, which advocates the transferability of the utility connections in favor of
the beneficiary. The beneficiary must tender to a registered gift deed to further
transfer the property.
IMPORTANT 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.

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.

PROPERTIES THAT CAN BE GIFTED THROUGH A

GIFT DEED
Both immovable and movable properties can be given away as gifts by the donor
to the donee. Immovable property means land or any benefits arising out of land
or anything attached to the earth but does not include growing crops, standing
timber or grass. The properties that are not considered immovable properties are
considered as movable properties.However, the donor can gift only the properties
that are existing at the time of registering the gift deed. He cannot gift the
property which he expects or will get in future.

DOCUMENTS REQUIRED FOR REGISTRATION:

Apart from the aforementioned documents, you will need to produce the original
gift deed, as well as ID proof, PAN card, Aadhaar card, the sale deed of the
property, as well as other documents pertaining to other agreements regarding
this property.

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.

CHARGES FOR THE GIFT DEED REGISTERATION:

• For gift deed registration, you will have to pay the stamp duty and
registration fee.
• In India, the state government determined the cost of gift deed registration
like that of a sale deed. Prior to calculating the registration fee, a value
determines the worth of the gifted property based on the market value.
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.
CONCLUSION:
Keep in mind that gift deed is not for the minors. As per the bylaws, the
minors cannot enter into the contract; henceforth, they cannot transfer a property
to another person. However, the same law has a different proposition for donee
in this context. If a donee is a minor, then his/her guardian on his behalf can
accept the gift. The guardian will continue to follow the Procedure for Gift deed
registration and adhering sole responsibilities being the owner of the property
until the donee becomes an adult.

REFERENCES:
1.https://corpbiz.io/learning/procedure-for-gift-deed-registration-a-step-by-step-

guide/ 2.https://cleartax.in/s/gift-deed-format

3.https://housing.com/news/everything-you-need-to-know-about-gift-deed/
 GIFT DEED FORMAT
This deed of gift made this 8th Day of October 2010 between,

Mr Sunil Rohra , Age 65 Years Resident of Mumbai herein after called the
(Donor) of the One part

And

Miss Radhika Rohra , Age 40 Years resident of Mumbai Herein after called the
(Donee) of the Other part

Witnesses as Follows:

• In consideration of natural love and aflecion being daughter of the Donor,

hereby assigns unto the donee Sum of Rs.10,00,000 (Rupees Ten Lakhs Only)
and to have and to hold the same unto the donee absolutely

• The possession of the Rs.10,00,000 (Rupees Ten Lakh Only) vide cheque No.
519639 Drawn on 20th October , Mumbai branch dated 8-10-2010 herein above
donated unto the donee and has been physically handed over to the donee as
absolute owner before execution of this Gift Deed.

• The said gift of the Rs.10,00, 000/- (Rupees Ten Lakhs Only) has been
accepted by Miss Radhika Rohra

• The donor from this date reserves no right or interest on the Said sum hereby
gifted which shall from this day be the sole and exclusive property of the donee

• The property hereby gifted is the donor's self-acquired property accumulated

out of income earned and has full right and authority to dispose off it any manner
he may think fit

In witness whereof, the parties hereto have put their respective Signatures on this
deed of gift in presence of witnesses.

Witness Name: Rajkumar Rohra