What is Gift Deed and It’s Working?

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Gift Deed: Legal Provisions and
Registration fee
March 28, 2022
Everyone enjoys giving gifts to family and friends. Despite the fact that
gifting is frequent, few people are aware of the legal implications. Gift
deeds are the ideal way to give, and in some ways, this procedure
outperforms producing a "Gift Deed." Continue reading to learn more
about the legal provisions involved and how it is involved in the
formation of a "Gift Deed."
What is a Gift Deed, and how does it work?
A gift deed allows the legal owner of a property to transfer it to another
person without paying any money. It must be signed by the donor,
witnessed by two others, and the gift deed is registered. Stamp duty on
gift deeds must be paid on the value of the property, therefore fees will
vary by state. Usually, such gifts are presented from one family member
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to another, but this is not the case. Gift deeds in blood relation (as well
as wedding gifts) are exempted from taxation.
● Parties in the form of a Gift Deed
A gift deed has two parties: the donor and the donee. The donee is the
person to whom the property is gifted, and the donor is the one who
gifts his property. At the time of the gift, the donor must be of sound
mind and capable of entering into agreements.
A minor is unable to gift property since he or she is unable to enter into
contracts. The guardian of a child, on the other hand, can receive
presents on behalf of the minor and retain the validity of the gift deed.
The donor should give without expecting anything in return, that is, the
donor should not get anything from the donee in exchange for making
the gift.
● What can be given as a gift?
To be considered a gift in Indian law, a property must satisfy the
following criteria:
● It doesn't matter if it is moveable or immovable property.
● It must be possible to transfer ownership of the property.
● The house should not be used as a rental in the future.
● A tangible asset is required.
● How to write a gift deed?
The following information should be included in a gift deed format:
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● The location and timing of executing a gift deed.
● Names, addresses, relationships, dates of birth, and signatures of
the donor and donee are all included in the gift deed.
● Details of the property you're drafting a gift deed for.
● Two witnesses are required to testify about the gift deed as well
as sign it.
The gift deed must then be printed on stamp paper after paying the
requisite fee and recorded at the registrar's or sub-office, the registrar's
relying on the value deduced by the state government.
● Legal Provisions for Gifts of Property
A gift deed is governed under Section 122 of the Transfer of Property
Act, 1822, and by numerous sections of The Indian Contract Act of
1872. The offering and accepting of the gift by the doner is final and
cannot be reversed later, according to the law. So, if all of the elements
for a legitimate donation are met, the gift cannot be revoked by the
donor later, unless the permission was obtained by deception, undue
influence, or coercion. the High Court and Supreme Court have
repeatedly held that a properly given gift cannot be revoked later under
any circumstances which were overturned by introducing cancellation
of registered gift deed under Senior Citizen Act 2007.
The gift of immovable property is valid under Section 123 of
the Transfer of Property Act, 1882, if it is made through a registered gift
deed signed by both the donor and the donee and witnessed by two
people. When given under a registered gift deed or by giving the
property to the donee, the gift of movable property is valid. If you
provide an immovable property as a gift, you must register it under
Section 117 of the Registration Act.
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● What presents must be in the form of a gift deed?
You won't be able to give away everything you have. You may sell the
self-acquired property if you are a Hindu. Similarly, if you're a
coparcener, you can sell your coparcenary interest in a property if
certain conditions are met. In some circumstances, a widow may gift a
small amount of her husband's estate, although she cannot do so by
will.
● What distinguishes a gift from a sale deed?
You transfer your property away for money in a sale deed. The deed is
recorded and shows the amount you were paid for the property you
sold. If it's a gift, though, you're giving up your possessions for no
money. A widow may gift a tiny piece of the property she inherited from
her husband in certain circumstances, but she cannot do so by will.
● Gift deeds are subject to income tax
After April 1, 2017, gifts are subject to income tax under Section
56(2)(x) of the Income Tax Act of 1961. The value of all gifts received by
a person during a year is totally exempt under income tax legislation, as
long as the total value of such gifts does not exceed Rs 50,000 in a
calendar year. If the total value of all presents received reaches Rs
50,000, the total value of all gifts received becomes taxable, with no
threshold exemption.
Gifts between two close relatives, on the other hand, are treated
favorably under income tax legislation. As a result, any asset (movable
or immovable) given to specifically designated relatives is totally
tax-free in the recipient's hands, with no maximum limit. Parents,
spouses, siblings, spouse's siblings, lineal ascendants, and descendants
of the person and his or her spouse are all included in the list of close
relations.
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● Stamp Duty on gift deeds
Gifting is the act of a person voluntarily transferring some or all of his or
her ownership rights in an asset to another person for no monetary
payment. Given that the donor is not earning anything from the transfer
of ownership of the property, it may appear bizarre that a donor is
asked to pay a fee in order to gift his property to another person.
Despite the fact that this is not a conventional transaction, donating a
home has tax and stamp duty ramifications. In India, the stamp duty on
gift deeds varies by state and can range from 2% to 7% of the
property's value.
Registration fee for gift deed
Gift deed registration fees, like those for other deeds involving property
exchange, must be paid in order for this document to be legally binding.
Some states charge 1% of the property's value as a gift deed registration
fee, while others impose a flat price.
What grounds exist in India for canceling a gift deed?
Cancellation of Gift Deed in India is governed under Section 126 of the
Transfer of Property Act, 1882. The Property gift deed rules
for cancellation are:
If certain circumstances indicated in the gift deed happen or don't
happen without the donor's knowledge or control. In the registered
deed, this ground should be indicated. To be legally binding, it should
be included in the gift transaction if it is addressed directly in a separate
agreement.
If permission to the agreement is obtained through deception, undue
influence, misinterpretation, or coercion, the revocation/cancellation
terms shall not be abhorrent or illegal to the property.
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The central government passed 'The Maintenance and Welfare of
Parents and Senior Citizens Act, 2007' (The Maintenance Act) to ensure
that parents and senior citizens are properly cared for by their children
or legal heirs.
Final Thoughts
Many legal consequences, such as tax problems, can arise when
drafting a gift document for immovable property. When it comes to
immovable property, it's best to hire a lawyer to create a gift deed and
related legal advice.
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