What is Gift
As per Section 122 of the Transfer of Properties Act 1882 Gift is the transfer of certain existing moveable or immoveable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee.
Acceptance of Gift when to be made
Such acceptance must be made during the lifetime of the donor and while he is still capable of giving. If the donee dies before acceptance, the gift is void.
Is it necessary to Register Gift Deed
As per Section 17 of the Registration Act, 1908 registration of Gift Deed is mandatory when the Gift Deed is for transferring a property.
Donor
Donor is the person who makes gift to the Donee. Any person who is of sound
mind and is competent to enter into an agreement can be a donor except a minor.
Donee
Donee is the person who accepts the gift. A minor can also be a donee and the it should be accepted by guardian of minor donee on behalf of the donee. In case of the onerous gift (gift attached with some conditions), a minor after attaining adulthood, can either accept the gift or return it.
Main points to be included in a Gift Deed
Information about Donor and Donee
Relationship between donor and donee needs to be mentioned in the Gift Deed and whether they are blood relatives or not is also need to be clarified. Gift given to blood relatives is tax free and few state governments are giving concession on stamp duty.
Free Will
It should be mentioned in the Gift Deed that the the transfer is voluntary and the Donor has a clear intention to give gift and Gift is being given by the Donor free from coercion, undue influence, threat or fear.
Consideration Clause
Regarding consideration it should be mentioned that the transfer is being made out of love and affection and there is no exchange of money or any other consideration is given.
Ownership and Possession of Property
The Donor should be the absolute owner of the property without any liability and it should be in the possession of the Donor. It should be mentioned in the Gift Deed.
Description about the Property or Article
A detailed description of the property is a must. It should clearly specify the
structure, address, color, area, location, etc.
Details about liabilities rights etc
Details related to any liability or right on the property should be clearly mentioned.
Rights of Donee
The Donee should be given full right to enjoy the property including addition, alteration, giving the property on rent, receive rent, receive any other profits and right to sell the property etc.
Delivery of Property
The Gift Deed should contain a clause confirming delivery of the Property
Revocation of Gift Deed
Revocation clause in Gift Deed is not mandatory. Even though it is advisable to include revocation clause to avoid future complications. This clause needs to be expressly mentioned, not implied. And donor and donee both have to agree on this clause.
Witnesses
Two witnesses should be signed on the Gift Deed
Signature of Donor and Acceptance of Donee
The Gift Deed must be signed by the Donor and accepted by the Donee by putting signature.
Registration of Gift Deed
It is mandatory to register a Gift Deed involving transfer of property.
Documents required for registration of Gift Deed
1. Original Gift Deed
2. ID proof of Donor and Donee
3. Aadhaar Card in case of resident Indians
4. ID proof of witnesses
5. Sale Deed or other documents showing ownership of the property
6. Other agreement if any related to the gifted property
Stamp Duty for Registering Gift Deed
There are different rates of stamp duty in different states. It is the same rate of stamp duty required to pay for transfer of property.
Types of properties which can be gifted
Any movable or immovable property owned by the Donor
A tangible property
Cancellation of Gift Deed
A Gift made through registered Gift Deed cannot be cancelled as after acceptance of Gift, it become the property of the Donee. In a deed where the parties have agreed that the deed shall be revocable in part or whole, by the mere will of the donor, is not a valid Gift Deed.
Revocation of Gift Deed as per Section 126 of the Transfer of Property Act
When gift may be suspended or revoked
The donor and donee may agree that on the happening of any specified event which does not depend on the will of the donor a gift shall be suspended or revoked; but a gift which the parties agree shall be revocable wholly or in part, at the mere will of the donor, is void wholly or in part, as the case may be. A gift may also be revoked in any of the cases (save want or failure of consideration) in which, if it were a contract, it might be rescinded. Save as aforesaid, a gift cannot be revoked. Nothing contained in this section shall be deemed to affect the rights of transferees for consideration without notice
Tax on Gift
As per Section 56(2)(x) of the Income Tax Act 1961 gift is taxable as under
where any person receives, in any previous year, from any person or persons
on or after the 1st day of April, 2017,
(a) any sum of money, without consideration, the aggregate value of which
exceeds fifty thousand rupees, the whole of the aggregate value of such sum;
(b) any immovable property,
(A) without consideration, the stamp duty value of which exceeds fifty thousand
rupees, the stamp duty value of such property;
(B) for a consideration, the stamp duty value of such property as exceeds such
consideration, if the amount of such excess is more than the higher of the
following amounts, namely:
(i) the amount of fifty thousand rupees; and
(ii) the amount equal to five per cent of the consideration:
This clause shall not apply to any sum of money or any property received-
(I) from any relative; or
(II) on the occasion of the marriage of the individual; or
(III) under a will or by way of inheritance; or
(IV) in contemplation of death of the payer or donor, as the case may be; or
(V) from any local authority as defined in the Explanation to clause (20) of
section 10; or
(VI) from any fund or foundation or university or other educational institution
or hospital or other medical institution or any trust or institution referred to
in clause (23C) of section 10; or
(VII) from or by any trust or institution registered under section 12A or
section 12AA; or
(VIII) by any fund or trust or institution or any university or other
educational institution or any hospital or other medical institution referred to
in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of
clause (23C) of section 10; or
(IX) by way of transaction not regarded as transfer under clause (i) or
71[clause (iv) or clause (v) or] clause (vi) or clause (via) or clause (viaa) or
clause (vib) or clause (vic) or clause (vica) or clause (vicb) or clause (vid)
or clause (vii) of section 47; or
(X) from an individual by a trust created or established solely for the benefit
of relative of the individual.
Following clause (XI) shall be inserted after clause (X) of proviso to clause
(x) of sub-section (2) of section 56 by the Act No. 23 of 2019, w.e.f. 1-4-2020
:
(XI) from such class of persons and subject to such conditions, as may be
prescribed.