A Gift Deed is a legal document that certifies the lawful transfer of a gift from one person to another. A gift deed, as described in Section 122 of the Transfer of Property Act of 1822, is a legally enforceable written instrument that allows the donor to willingly transfer an existing piece of real estate to the donee.
Giving something to someone out of genuine love and devotion and without expecting anything in return is the only way a gift deed is acceptable. Additionally, Section 17 of the Registration Act, 1908 mandates that you get a registered gift deed in order to transfer immovable property.
PROCESS OF GIFT DEEDS IN INDIA
DRAFTING OF GIFT DEED
The first stage in the gifting procedure is to draft a gift deed. The assistance of a lawyer in this situation is essential since they will be writing the gift deed. The information about the donee and the asset that is intended to be transferred is often included in the draft. It should be emphasized that using a gift deed for financial transactions is not advised.
ACCEPTANCE OF THE PROPERTY
The donee must receive an asset or piece of property from the donor throughout their lifetime in accordance with the prevailing legislation. The gift deed will become useless and void if the donee refuses to accept the property from the giver.
A gift deed that has not been registered is not admissible in any situation under section 123 of the Transfer of Property Act. To attest to the giving procedure, two witnesses are required.
Any gift deed, whether movable or immovable, will only be accepted as supporting or sustaining evidence if it has been registered. Although the Transfer of Goods Act does not require registration for gifts of movable property, you are free to do so. It’s crucial to keep in mind nonetheless that an unregistered gift deed is not legally binding.
On the other hand, Chapter 17 (a) of The Registration Act, 1908 makes the Gift Deed document necessary for the transfer of an immovable property. Additionally, registration necessitates the consent of the Donor and the Donee. While unlikely, there are times when you could wish to give away a costly automobile, home, or piece of real estate and the recipient might decline the gift. It cannot be recorded and makes the Gift Deed worthless from the start.
HOW TO DRAFT A GIFT DEED?
The method described below can be used to prepare a gift deed:
- The location and date on which the gift deed is to be completed should be stated at the top.
- Both parties must include all pertinent details, including address, name, birthdate, and signature.
- Include all relevant information about the property in the deed.
- A gift deed needs the signatures of two witnesses.
- Once the money has been paid, a gift deed should be produced on stamp paper. It should then be registered at the registrar’s or sub-office registrar’s after that.
REGISTRATION OF GIFT DEED
A gift deed is only valid if it is registered, according to the Transfer of Property Act of 1882. A gift deed cannot be recorded without the donor’s and donee’s signatures as well as the attestations of two witnesses (mandatory). In reality, the Gift Deed would only be enforceable if it was filed with the registrar’s office.
A gift deed must be registered by listing all applicable terms on a stamp paper and paying the necessary stamp duty. State to state variances occur in the cost of the stamp duty. It should be emphasized that if the gift is moveable, the registrar’s office will have jurisdiction based on the donor’s residency.
DOCUMENTS REQUIRED FOR GIFT DEED REGISTRATION
The Registrar/Sub-office Registrar’s is where gift deed registration is completed. However, essential identity documents and property records, such as Original Gift Deed ID documents like an Aadhar card or a driver’s license, Donor and donee PAN cards, Document proving the, donor’s ownership, such as a sale transaction or title deed, a passport-sized picture, ID evidence for the witnesses, Address witness proof, are required in order to register a gift deed.
PROCEDURE FOR GIFT DEED REGISTRATION
The steps to register the gift deed are as follows:-
- A licensed expert will assess the real estate covered by the donation deed.
- In the presence of two witnesses, the donor and donee will sign a gift deed.
- To deliver the signed paperwork, make your way to the closest sub-registrar.
- For the computation of the registration fees*, including stamp duty, use a lawyer. The fees specified must be paid.
- Attest the action
- You must pay the registration cost and stamp duty to register a gift deed.
STAMP DUTY ON GIFT DEED RRGISTRATION
The stamp duty on gift deeds, which is an essential part of the registration of gift deeds, has tax ramifications for gifts. As of April 2017, gifts are subject to taxes under Section 56 of the Income Tax Act of 1961.
According to the aforementioned Act, if a person receives a gift worth more than Rs 50,000, they would be taxed under the “Income from Other Sources” category.
When a person receives an immovable property as a gift and the cost of the stamp duty exceeds Rs 50,000, Section 56 of the Income Tax Act states that the Donee is responsible for paying the stamp duty.
REVOCATIONOF GIFT DEED
A gift deed may be withdrawn. Revocation or cancellation of a gift deed is governed under Section 126 of the Transfer of Property Act of 1882. A gift deed may only be cancelled in accordance with this statute in the following circumstances:
- when the revocation of the gift deed is required by a clear agreement between the donor and the donee. The giver cannot unilaterally rescind the gift deed. The gift deed is invalid if it is cancelled entirely at the donor’s request.
- Except for the reasons of non-payment or absence of consideration, a gift deed may be cancelled in the same manner as a contract.
- A gift deed may be completely or partially revoked.
The reasons listed above do not allow for the revocation of a gift deed. It should be noted that in the event of a donor’s passing, the gift deed may be revoked on the donor’s behalf by the donor’s legal heirs.
The gift deeds are not appropriate for Minors. According to the rules, children are not allowed to sign contracts; hence they are unable to transfer ownership of property. But in this situation, the identical law has a different proposal for the donee. If the donee is a minor, the gift may be accepted on their behalf by their guardian. Up until the donee reaches adulthood, the guardian will continue to complete the procedure for gift deed registration and adhere to single ownership duties. A gift deed is a legal instrument used to voluntarily transfer ownership of movable or immovable property from one person to another. A gift deed has to be registered, and doing so requires paying the necessary registration fees.
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