Well, human life is about maintaining and developing relationships. And relationships are for investing time and energy in the people around us, isn’t it? There is one act that often helps us in strengthening our relationship. And that is providing gifts to our near and dear ones. There is one way wherein you can gift something substantial to your loved one. You can do this by drafting a gift deed.
What Is Gift Deed?
A gift deed is defined as a legal instrument for getting movable and immovable property transferred. A gift deed is a property transfer that takes place voluntarily and there is no consideration. Gift usually takes place on the basis of affection and love. To cite an instance, some ancestral property is transferred from a grandparent to his/her grandchildren in the form of a gift.
A gift deed is regulated by Section 122 of the Transfer of Property Act, 1822. Besides, it is mandatory to register an immovable property (which is given as a gift) under Section 117 of the Registration Act.
Drafting a Gift Deed of Immovable Property
Well, it is mandatory to make a gift deed when we gift immovable property to someone. While drafting a gift deed of immovable property, one should keep in mind the following points:
- You should give it in writing.
- It should be signed by the donor.
- It should be attested by two independent witnesses. And the witnesses cannot be the donor or the beneficiary of the gift.
- The gifts of immovable property invite stamp duty. Also, the gift deed should be put up on stamp paper, which has the same value as stamp duty payable.
- The stamp duty which is to be paid differs from state to state. Generally, it ranges from 2 to 5 percent of the property’s market value. In some states, stamp duty concessions are provided on gifts to blood relatives.
- Also, the Gift Deed after being duly executed and stamped should be registered with the Sub-Registrar of Assurances of that locality.
- Various states charge a fee of registration, which ranges from few hundred to 1 to 2 percent of the market value.
People Also Read This: What is the difference between a conveyance deed and a sale deed?
A Good Immovable Property Gift Deed Should Have The Following Points:
- First, you need to describe the property that you are gifting. The address of the property should be given properly with the following details: locality or the street, the local post office, the panchayat (in case it is a rural area) or an urban authority in case it is a city, the block, sub-district, district, state and the PIN Code. These details are sufficient to identify any property in India uniquely.
- It is also better to clearly state the property’s boundaries and size and the survey number of the property in the land records of the state.
- There should also be a statement mentioning the donor’s title on the property. This can be done best by putting up the deed by which the donor become the owner of the property.
- There should be an explicit mention of the fair market value of the property. This is important in calculating the stamp duty on the gift.
- There should be a clear & categorical statement that the transfer has been made freely & voluntarily, without any consideration.
- There should be a statement wherein the beneficiary accepts the gift. Without the consent of the beneficiary, the gift doesn’t come into effect.
Drafting A Gift Deed of Movable Property
As for movable property, a gift deed is not mandatory. However, you can still draft a Gift Deed for movable property also. If a Gift Deed is carried out for movable property, it should be done in exactly the same way as a Gift Deed of immovable property is done (as explained earlier).
A Movable Property Gift Deed should have at least the following in its content:
- You should try to mark out some unique identification associated with the property. For instance, a car can easily be identified by its registration details.
- A statement that states the nature of the donor's ownership over the property.
- The fair market value of the property should be mentioned.
- A clear and explicit statement that the property has been transferred, without consideration, also freely and voluntarily.
- An acceptance statement by the gift’s beneficiary. Only then the gift can become effective.
- Place, date and time of execution.
People Also Read This: Land & Property Registration: All You Need To Know
Drafting a Money Gift Deed
It is not mandatory to register a Money Gift Deed. It can very well be carried out on paper and signed by the two parties. It can also be carried out by an exchange of letters between the parties. It should contain letters of offer and acceptance.
Documents Required for Registration of Gift Deed
The duly executed, and stamped, Gift Deed must be presented to the office of the local Sub-Registrar of Assurances for registration.
Some states may require the advocate, or registered deed-writer, who drafted the Gift Deed to affix a declaration, and their registration number, on the Deed.
A true certified copy of the Gift Deed. This copy will be retained by the registering authority. The Registration Rules of the state in which the Deed is being registered will specify the procedure for making a true certified copy of the Deed.
Proof of payment of the registration fees payable, if any.
Identity, and Address, Proofs of all the parties and the attesting witnesses.
Those who read this Article also Consulted a Lawyer about Gift Deed and Property Transfer.
The Difference Between A Gift Deed and a Property Sale
Once a property is transferred to you as a gift, you are its owner. The gifted property can be sold. But, a gift deed is different from a property sale. A property sale involves the payment of some money for the transfer of property. A gift deed is voluntary and without any payment of money. Hence, once you have validly registered the gift deed and are the property owner, you can sell the gifted property for consideration.
Drafting a gift deed for an immovable property may involve many legal implications, such as tax considerations. Prefer hiring a lawyer to draft a gift deed for immovable property.