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What is a Gift Deed in Property Registration?
A gift deed is a formal document that documents the voluntary transfer of property from the giver (donor) to the recipient (donee) in the absence of any financial compensation. This gift deed can be drafted for all kinds of properties like apartments, villas, and plots. In contrast to a sale or a will, a gift deed allows ownership rights to be transferred instantly and permanently while the giver is still alive.
Gift Deeds, which allow property to be voluntarily transferred from a donor to a donee without requiring monetary transaction, are covered by the Property Act of 1882. In accordance with the Property Act of 1882:
- When the deed was being made, the gift property that was to be transferred had to be present or should have been.
- The property being donated must have a valid title and be legally owned by the donor.
- There should be no coercion and the gift should be pure and free.
- No financial or other kind of compensation should be included in the gift.
- The gift of property should be accepted by the recipient, known as the Donee.
- Immovable assets, such as a house or piece of land, can also be included in a gift deed.
Gift Deed Registration Process
Step 1: Create a comprehensive Gift Deed document that includes all required elements, such as the donee and donor’s information, a description of the property, a consideration clause, a transfer clause, an acceptance clause, and the signatures of both parties and witnesses.
Step 2: Determine the relevant stamp duty by using the property’s market value. State-by-state variations exist in stamp duty rates, which normally fall between 2% and 7% of the property’s market value. Use an e-stamping facility or a designated bank to pay the stamp duty. To complete the registration procedure, make sure you have the stamp duty payment receipt.
Step 3: The donee and the donor must sign the gift deed in front of two or more witnesses. For the deed to be deemed legal, all parties—including the witnesses—must sign it.
Step 4: Within four months of the execution date, visit the local Sub-Registrar’s office with the signed Gift Deed and the necessary paperwork. There may be fines if the presentation is postponed past this time.
Step 5: The Gift Deed’s information, including the donor, donee, and witnesses’ names, shall be confirmed by the Sub-Registrar. The correctness of the property information may also be checked by the Sub-Registrar.
Step 6: The registration charge, which varies by state and is normally roughly 1% of the property’s market value, must be paid. This charge is on top of the stamp duty.
Step 7: Submit the following files at the office of the sub-registrar:
The original gift deed, proof of identity for both the donor and the recipient (passport, PAN card, and Aadhar card), address the donor’s and donee’s proofs, property records (encumbrance certificate, property card, and title deed), pictures of the donor and donee in passport size, witnesses’ addresses and identification documents.
Step 8: Once the verification is complete, the Sub-Registrar will endorse the Gift Deed by affixing an official seal and signature, making it legally binding. The registered Gift Deed will be returned to the parties after completing the formalities.
Step 9: A copy of the registered Gift Deed will be kept on file by the Sub-Registrar’s office throughout this time. We shall return the original deed to the donee.
Stamp Duty and Registration Fee for Gift Deed
The stamp duty charges for gift deed to buy properties in Tamil Nadu is as follows,
- Gift by family members- 1% of the proprety’s total market value
- Gift by non-family members- 7% of the property’s total market value
The registration charges is 1% for both family members and non-family members.
Tax Exemptions on Gift Deed
As long as the entire amount of gifts received by an individual in a given year does not surpass Rs 50,000, the value of all presents received is completely free from income tax rules. The total amount of all the gifts received becomes taxed without any threshold exemption if they total more than Rs 50,000. Income tax regulations, however, also favor donations given between close family.
Therefore, any asset (movable or immovable) given to certain relatives is completely tax-exempt in the recipient’s possession, with no maximum limit. Parents, spouses, siblings, the spouse’s siblings, lineal descendants, and the individual’s lineal ascendants are all included in the list of close relations. The spouses of the aforementioned individuals are also on the list.
Cancellation of Gift Deed
Revoking a gift deed can be done only under certain conditions as they are generally irrevocable. Some of those conditions under which you can revoke your gift deed are as follows,
- By Mutual Consent: The giver and the recipient may mutually agree to terminate or rescind a gift transaction. By including such provisions within the gift document, this can be achieved. The condition must be mutually agreed upon and understood by both parties, even if it isn’t included in the Deed.
- When the Donee declines the gift: When a piece of property is given as a gift, the legal owner, the donor, transfers ownership to the recipient, who then accepts the gift. If the giver refuses the gift or fails to express his acceptance, it might result in the cancellation of the gift deed.
- Through rescissions: A gift may be provided with conditions and withdrawn if those conditions are not fulfilled, much like a contract. When a specified event occurs or the Donee fails to meet a condition, the donor has the ability to cancel the gift deed and regain control of the property. The sender can only cancel the gift transaction within three years of the event date.
- When coercion or deception was used to acquire the donor’s consent: A gift is an unpaid transfer that the giver voluntarily makes. The donor might cancel the Deed of Gift if the donor’s consent is acquired by force, fraud, undue influence, or deception.
Frequently Asked Questions
1. Do you need legal advice to execute a gift deed?
When drafting the gift deed, a lawyer or legal expert should contain the donor’s and donee’s names and information, any restrictions tied to the gift, and a thorough description of the property.
2. Are there any disadvantages to gift deed properties?
One of major advantage of a gift deed is, it is irrevocable. It is impossible to reverse a decision once it has been made unless you have a strong reason to revoke it. Further, the donor loses complete control of the property that has been gifted.
3. Is a gift deed different from a will?
A legal document that expresses a person’s desires for how their assets and property will be divided after their death is called a will. On the other hand, A gift deed allows one person to give another ownership of personal or real estate without having to exchange money.