A gift deed is a legal document used for the transfer of ownership of a property from one person to another as a gift. It is a voluntary act, and the person who gives the gift is known as the 'donor,' while the person receiving the gift is the 'donee.' Gift deeds are commonly used for transferring properties and can be a useful way to pass on assets and wealth.
What is a gift deed
A gift deed is a legal document that allows a property owner to transfer ownership of their property to another person as a gift. It is a voluntary act of giving, and the donee (the recipient) does not have to pay any consideration for the gift.
Gift deed format
A gift deed must be executed on non-judicial stamp paper or e-stamp paper, which is available in certain states. The value of the stamp paper would depend on the state in which it is executed and where the property is situated. Each state in India has provisions in respect of the amount of stamp duty payable on the gift deed, and the same would need to be determined based on the specific facts of the case.
Components of a gift deed
Here are some important things that should be mentioned in the gift deed format:
- The place and date on which the gift deed is to be executed
- Relevant information on gift deed regarding the donor and the donee, such as their names, address, relationship, date of birth and signatures
- Complete details about the property for which you draft a gift deed
- Two witnesses to bear testimony of the gift deed and their signatures
Important clauses in a gift deed
When drafting a gift deed in India, several important clauses must be included:
- Details of the donor and donee: Full legal names, addresses, and relationships.
- Description of the Gift: A clear description of the gifted property or asset.
- Free will and consent: A statement that the gift is made voluntarily without coercion.
- Transfer of ownership: Confirmation that the ownership rights are being transferred immediately and unconditionally.
- Consideration clause: A declaration that the gift is made without any monetary exchange.
- Revocation clause: Conditions under which the gift can be revoked, if applicable.
These clauses ensure legal validity and clarity in the gift deed.
Documents required for gift deed registration
The following documents are required for registering a gift deed:
- Original gift deed
- ID proof like Aadhaar Card, Driving License among others
- PAN card of the donor and donee
- Document such as a sale deed or title deed to prove the ownership of the donor
- Passport size photograph
- ID proof of the witnesses
Stamp duty charges on gift deed registration
Stamp duty charges on gift deed registration vary from state to state. The value of stamp duty payable on a gift deed would depend on the specific facts of each case. Information regarding stamp duty payable can be found on state government websites.
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Who can be a donor/donee in a gift deed?
In a gift deed, the donor is the person who voluntarily transfers ownership of property or assets, while the donee is the recipient of the gift.
- Donor: Any individual who is legally competent to contract, meaning they must be of sound mind and an adult (18 years or older in India). The donor must also have full ownership of the property or asset being gifted.
- Donee: Can be any person, including minors, legal entities like companies, or charitable organizations. However, if the donee is a minor, a legal guardian must accept the gift on their behalf.
This ensures that the gift deed is legally valid and enforceable.
What are tax exemptions on property as a gift
When property is received as a gift in India, it may be subject to tax unless it qualifies for exemptions. Under Section 56(2)(x) of the Income Tax Act, gifts of immovable property are tax-exempt if the property's stamp duty value does not exceed Rs. 50,000. Gifts received from specified relatives, including parents, siblings, or spouses, are also fully exempt from tax, regardless of the property's value. Additionally, gifts received on occasions like weddings or through inheritance are exempt. However, gifts from non-relatives exceeding Rs. 50,000 in value are taxable in the hands of the recipient as "Income from Other Sources."
What is the difference between a gift deed and a will
A gift deed is a legal document used to transfer ownership of property or assets from a donor to a donee during the donor's lifetime, without any exchange of money. The transfer is immediate and irrevocable once the deed is executed.
A will, on the other hand, is a legal document that outlines how a person's assets should be distributed after their death. Unlike a gift deed, a will only takes effect after the testator's death and can be altered or revoked at any time before death.
The key difference lies in the timing and revocability of the transfer.
