Gift Deed drafting
A gift deed is a legal document that allows the voluntary transfer of ownership of movable or immovable property from one person (donor) to another (donee) without any monetary consideration. It is executed and registered under the Transfer of Property Act, 1882.
Gift Deed Drafting: A Complete Guide
A gift deed is a legal document that allows the voluntary transfer of ownership of movable or immovable property from one person (donor) to another (donee) without any monetary consideration. It is executed and registered under the Transfer of Property Act, 1882.
Key Elements of a Gift Deed
Details of Donor and Donee
Full name, address, and relationship between the parties.
Description of Property
A clear and precise description of the gifted asset (land, house, jewelry, shares, etc.).
Voluntary Nature of Gift
Confirmation that the transfer is voluntary, without force, fraud, or coercion.
Consideration Clause
The gift must be given without any exchange of money or valuable consideration.
Ownership and Possession
The donor must be the legal owner of the property and must have the right to transfer it.
Acceptance by Donee
The donee must accept the gift during the lifetime of the donor.
Rights and Liabilities
Mention whether the donee is receiving the property with or without liabilities.
Revocation Clause (Optional)
Conditions, if any, under which the gift can be revoked.
Witnesses
The deed must be signed by two witnesses.
Registration of Gift Deed
Under Section 123 of the Transfer of Property Act, 1882, a gift deed for immovable property must be registered with the sub-registrar to be legally valid.
Procedure for Drafting & Registering a Gift Deed
Draft the Gift Deed
A lawyer or legal expert drafts the deed, ensuring compliance with legal requirements.
Stamp Duty Payment
The applicable stamp duty varies by state. Check local stamp duty laws.
Execution of Gift Deed
The donor signs the deed in the presence of two witnesses.
Visit the Sub-Registrar’s Office
Both donor and donee must appear before the sub-registrar for registration.
Registration & Handover
After registration, the donee receives the property ownership.
Legal Considerations
Tax Implications: Gifts received from family members (parents, spouse, siblings) are usually tax-free under the Income Tax Act, 1961.
Revocation of Gift: Once accepted, a gift cannot be revoked unless a revocation clause is included.
Minor as Donee: If the donee is a minor, a guardian must accept the gift on their behalf.
Frequently Asked Questions (FAQ) on Gift Deed drafting
1. What is a Gift Deed?
A Gift Deed is a legal document used to transfer ownership of movable or immovable property from one person (donor) to another (donee) without any monetary exchange.
2. Is a Gift Deed legally valid?
Yes, a Gift Deed is legally valid if it is executed voluntarily, signed by the donor and donee, attested by two witnesses, and registered (for immovable property).
3. Can a Gift Deed be revoked?
A Gift Deed is generally irrevocable, unless a specific revocation clause is included and mutually agreed upon by both parties
4. What are the stamp duty charges for a Gift Deed?
Stamp duty varies by state and depends on factors like the relationship between donor and donee. Some states offer concessions for gifts between family members.
6. Can a minor be a donee in a Gift Deed?
Yes, but a legal guardian must accept the gift on behalf of the minor. The minor can either accept or return the gift upon reaching adulthood.
7. Can a minor be a donor in a Gift Deed?
No, a minor cannot execute a Gift Deed as they are not legally competent to transfer property.
8. What happens if the donee does not accept the gift?
If the donee does not accept the gift during the donor’s lifetime, the Gift Deed becomes invalid.
9. Is consideration (money) required for a Gift Deed?
No, a Gift Deed must be made without any monetary consideration. If money is exchanged, it is treated as a sale, not a gift.
10. What documents are required for Gift Deed registration?
Original Gift Deed
Identity proof of donor and donee
Property documents (title deed, sale deed, etc.)
Proof of relationship (if applicable for stamp duty exemption)
Two witness signatures
Stamp duty payment receipt
11. Is income tax applicable on a gifted property?
If received from a relative (parents, spouse, siblings, etc.), it is tax-free under Section 56(2) of the Income Tax Act.
If received from a non-relative, tax is applicable if the value exceeds ₹50,000.
12. Can a Gift Deed be challenged in court?
Yes, it can be challenged on grounds of fraud, coercion, misrepresentation, or lack of donor’s legal ownership.
13. What is the difference between a Gift Deed and a Will?
Gift Deed: Transfers ownership immediately.
Will: Transfers ownership only after the testator’s death.
14. Can a donor continue to live in the gifted property?
Only if the donor retains life interest in the property through a specific clause in the Gift Deed.
15. Who bears the cost of registration?
The donee usually pays the stamp duty and registration charges unless otherwise agreed.