Gift Deed
Introduction
Gift Deed – Quick Facts
- Purpose: Voluntary transfer of property without monetary exchange.
- Taxation: Gifts to specific close blood relatives are exempt from Income Tax.
- Mandatory Registration: Yes, under Section 17 of the Registration Act, 1908.
- Irrevocable: Once executed and accepted, a Gift Deed generally cannot be cancelled.
What is a Gift Deed?
A Gift Deed is a legal document used to voluntarily transfer ownership of a property (movable or immovable) from one person (the donor) to another (the donee) out of love and affection, without any financial consideration. To be legally valid, immovable property gifts must be formally registered, and the donee must accept the gift during the lifetime of the donor.
Are Gifts Taxable?
Under Section 56(2) of the Income Tax Act, property gifted to "specified relatives" (spouse, siblings, lineal ascendants/descendants) is completely exempt from tax. However, if property is gifted to a non-relative and the stamp duty value exceeds ₹50,000, it is fully taxable in the hands of the receiver under "Income from Other Sources." Note: Stamp Duty applies to all Gift Deeds, but many Indian states offer massive concessions (e.g., flat fixed fees or 1-2%) if the gift is between direct blood relatives.
Eligibility
Who can apply?
- The Donor must be the absolute legal owner of the property.
- The property must be existing (you cannot gift future property).
- The Donee must be alive to accept the gift.
Required Documents
- Proof of Ownership: Original Sale Deed or Title Deed in the Donor's name.
- Relationship Proof: Birth certificate, passport, or rationally accepted government IDs proving blood relation (to claim tax/stamp exemptions).
- Property Documents: EC, latest tax receipts, and approved plans.
- Identity Proofs: Aadhar and PAN of Donor, Donee, and two witnesses.
Application Process
How to Register a Gift Deed
- Drafting: The deed must explicitly state it is made out of "love and affection" with zero financial exchange.
- Acceptance clause: The deed must demonstrate that the donee has accepted the property (usually by signing the deed or taking possession).
- E-Stamping: Calculate the concessional stamp duty via your state's IGRS portal and purchase e-stamp paper.
- Execution at SRO: Both Donor and Donee, along with two witnesses, must physically appear at the Sub-Registrar Office.
- Registration: After verification of relationship proofs (if claiming stamp duty concessions), the deed is registered.