Gift Deed – Process of Gifting Property in India

Ever wondered how to gift a property to your family member? The property can be seamlessly passed on to your spouse or your next generation. The property gifting is carried out using a gift deed. The gift deed ensures that the gifting of property is recognised under the law and is free from any disputes. 

A gift deed is a legal document that allows a property owner to transfer his/her property to another person as a gift. The person who gifts the property is called as “donor” while the recipient of the property is termed “donee”. The purpose of gift deed is to legally establish the transfer of ownership. It can be used for gifting land, residential or commercial properties. 

The concept of gift deed is also mentioned in the Transfer of Property Act, 1882. The act clearly states that the gift must be given without any monetary consideration. 

In this blog, we’ll explore what a gift deed entails, its rules, process of registration, and why it’s a crucial document in property transactions.

What Does a Gift Deed Include?

A gift deed must contain the following information:

• Date & Location : The place and date on which the gift deed is executed.

• Details of Donor and Donees : Full name, address, date of birth and contact information of each party involved. 

• Description of Gift : Complete details of the property being gifted. 

• Signatures & Witnesses : It is mandatory to have two witnesses when the gift deed is being executed. Both donors and donees should sign the deed of gift in presence of two witnesses.

• Declaration of Gift : A written document signed by the donor that states their voluntary intent to gift property without expecting anything in return. 

• Property Right : The gift deed must also mention the property right of the donee. It should mention that the donee has rights to sell or lease the property. If required, the donee can also mortgage the property.

Rules for Executing Gift Deed

Here are some conditions or rules to execute the gift deed:

• The donor should have a clear title of ownership for the property. 

• Both the donor and the donee should be present at the time of gift deed registration and should have their signatures on the document. 

• The property being gifted should be a tangible property. 

• The property should be legally registered, and the owner should provide relevant proof of property registration. 

• The donee must accept the gift.

Benefits of a Gift Deed

Here are some important advantages of a gift deed:

1. Officially Legalises the Gift

A gift deed formally legalises the gifting process by disclosing complete details about the property and the parties involved. It is beneficial in preventing any future disputes.

2. Tax Benefits

A gift deed also provides tax exemption up to a certain limit. No tax is levied if the gift.

3. Quick Transfer of Property

Unlike a will, a gift deed facilitates the quick and immediate property transfer without any hassle. 

4. Emotional Satisfaction

The act of giving through a gift deed provides immense emotional satisfaction to the donor, knowing they have given a significant gift to the donor during their lifetime. 

5. Smooth Estate Planning

Through a gift deed, an individual can transfer property to their next generation during their lifetime. This ensures smooth estate planning as all assets and properties are distributed as per the wishes of the individual.

Documents Required for Gift Deed

To successfully register the gift deed, following documents are required:

1. Proof of Ownership

The donor must provide proof of ownership of the gifted property. This includes registration proof, title deed or other documents like 7/12 extract.

2. Identity Documents

Both the donor and donee should provide their identity documents like PAN, Aadhar, passport, etc along with their passport-sized photos.

3. Encumbrance Certificate

It is important to produce an encumbrance certificate as it signifies that the property being gifted is free from any legal issues or pending liabilities.

4. ID Proof of Witnesses

The two witnesses should also sign the gift deed and show their ID proof to confirm their identity.

Gift Deed Registration Process

1. Collate the Documents

The first step is to prepare the gift deed. The gift deed document should be drafted on a non-judicial stamp paper. This includes all necessary information about the donor, donee, and other information. Also, keep all the documents ready including identity proof of both the parties.

2. Visit the Sub-Registrar Office for Registration

The next step is to visit the local sub-registrar office for registration of the property. The identity proof of both parties will be verified along with the draft of the gift deed.

3. Payment of Stamp Duty

Pay the required stamp duty on the value of property or assets being gifted. The stamp duty varies as per the location. In Maharashtra, the stamp duty rate

4. Attestation

Both the donor and donee and the two witnesses must sign the agreement and attest it.

5. Receipt of Registration Deed

Once registered, the sub-registrar provides a copy of the registered Gift Deed, a legally recognised proof of the gift.

Gift Deed vs Will

Can the Gift Deed be Cancelled?

Yes, as per Section 126 of the Property Transfer Act, a gift deed can be revoked or cancelled. Here are the following conditions under which the gift deed can be cancelled:

• If both the parties mutually agree to revoke the deed.

• If the property is transferred solely on the donor’s will and the recipient is reluctant to accept the gift

• A gift deed can also be cancelled if certain conditions mentioned in it are illicit.

FAQs