Gift Deed








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What is a Gift Deed?

A Gift Deed is a legal document that represents a transfer of gift from one person to another as per the provisions of the law. Gift Deed is a legally binding written document defined in Section 122 of the Transfer of Property Act, 1822, through which the donor can transfer an existing movable or immovable property to the donee voluntarily.

A Gift Deed is valid only if it is given out of love and affection, without any consideration in return by one family member/ friend to another. Also, under Section 17 of the Registration Act, 1908, it is mandatory to have a registered Gift Deed when you want to transfer immovable property.


Table of Contents:
  1. Sample of a Gift Deed Format
  2. Important Clauses in a Gift Deed
  3. Who can be a donor/ donee?
  4. Steps involved in the drafting of Gift Deed
  5. Documents required for Gift Deed Registration
  6. How to register the Gift Deed in India? What is the Stamp duty in each state at the time of executing a Gift Deed?
  7. What type of properties can be gifted?
  8. Can a Gift Deed be revoked/canceled?
  9. What are the tax implications of gifting a property?
  10. In what scenarios executing a Gift Deed is more beneficial than executing a Will?
  11. Frequently Asked Questions

Sample Format of a Gift Deed


Important clauses in a Gift Deed

Being a very important legal document, there are certain things that you are required to mention in a Gift Deed. Some of them are –

All disputes however are not arbitrable and there are certain disputes which fall outside categories of arbitrable disputes as held by the Hon’ble Apex Court in the matter of Booz Allen and Hamilton Inc V. SBI Home Finance Ltd. These are:

  1. Consideration Clause – It should be clearly mentioned in the Gift Deed that the transfer is being made out of love and affection and there is no exchange of money or any other type of consideration is involved. It is irrelevant how small the consideration is, it would not be considered as a gift.
  2. Possession of Property – The property you want to gift, must be in your possession i.e. you must be the titleholder of that immovable property. While making a gift, the property must be in existence, you cannot gift something that you might get in the future.
  3. Free Will – The transfer should be free from any type of coercion, undue influence, threat or fear. The gift should clearly state that the transfer is voluntary and that the transferor has a clear intention of doing so.
  4. Information about Property – A detailed description of the property is a must. It should clearly specify the structure, address, color, area, location, etc.
  5. About Donor and Donee - The relationship between donor and donee is important as to whether they are blood relatives or not. Some state governments also offer a concession on stamp duty if gifts are made to blood relatives.
  6. Rights and Liabilities – Under this clause, if any additional rights or liabilities are attached to the gift shall be mentioned. For example, any rights relating to the further sale, or leasing it further.
  7. Rights of Donee – A clear mention of Donee rights forms an inseparable part of the Gift Deed. It includes the done rights to enjoy the property peacefully, to make changes to the property, receive rents or any profits that might arise from that property.
  8. Delivery - A delivery clause talks about the action (express or implied) which would confirm the delivery of the possession of the property.
  9. Revocation Clause – Though not mandatory, but advisable. It will help in avoiding future complications. It has to be expressly mentioned, not implied. And donor and donee both have to agree on this clause.

Who can be a donor/donee?

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A donor is a person who makes the transfer of immovable property. Any person who is of sound mind and is competent to enter into an agreement can be a donor. A minor cannot be a donor as he/she is not capable of entering into a contract.

A donee is a person who accepts the gift/transfer made to him. A minor can be a donee however, the gift would have to be accepted by donee’s guardian 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.

“If the donee accepts the gifts of which some bills are pending, then all the dues will be shifted on donee. For example, if you gift a property to your relative and a bill of Rs. 1000 is due then after the gift is transferred, it is your relative’s responsibility to pay the dues.” Says.

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Steps involved in the drafting of Gift Deed

A Gift Deed shall include the followings:

STEP 1: Draft a deed with the following essentials.

  1. Date and Place where the deed is to be executed
  2. Information about Donor and Donee like Name, Residential Address, Relationship among them, Date of Birth, etc.
  3. Details about the property
  4. Two Witnesses
  5. Signatures of Donor and Donee along with the witnesses

STEP 2: Get it printed on the stamp paper of appropriate value depending upon your state

STEP 3: Get the deed registered at your registrar or sub-registrar office.

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Documents required for Gift Deed registrations

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After making sure that your Gift Deed is signed, attested by witnesses and you have paid the stamp duty and registration charges as per your state regulations. You need to carry a few other documents like –

  1. Original Gift Deed
  2. ID Proofs, like Driver License, Passport, etc
  3. PAN Card
  4. Aadhar Card
  5. A document like Sale deed to prove donor title to the Property
  6. Other Agreements which you might have entered into in relation to property

The list is not exhaustive, you might need other documents like certificates relating to the value of your property depending on your state.

How to register the Gift Deed in India? What is the stamp duty in each state at the time of executing a Gift Deed?

After you have drafted the Gift Deed, print it on stamp paper of appropriate value and get it registered at the registrar office. Stamp duty that you need to pay varies state by state and can be paid either by buying stamp paper of such value or it can be done online.

Below are applicable Stamp Duty and Charges in some major states:

STATE STAMP DUTY
Delhi For Women 4% and Man 6% of the market value of the property.
Uttar Pradesh 6% for Women and 7% for Man of the total value of the property
Karnataka If the transfer is to non-family members it is 5.6% of the land value and in case of family members, it can range from 1000/- to 5000/- depending upon the property location.
Maharashtra Family members – 3%
Other Relatives – 5%
If Agricultural land or residential property is gifted then it is Rs.200
Gujarat 4.9% of Market Value
West Bengal 0.5% if transferred to family members and 6% in other cases.1% surcharge above 40lac.
Punjab None in case of a blood relative or else 6% of property value.
Tamil Nadu 1% for family members and 7% for other relatives
Rajasthan Male -5%
Female- 4% and 3% in case of SC/ST or BPL
None for Widow
1% if it is in favor of wife or daughter
2.5% in case close family members like son, daughter, in-laws, father, mother, grandson or granddaughter.

What type of properties can be gifted?

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Following properties can be gifted:

  1. A movable or immovable property
  2. An existing property
  3. A transferable property
  4. A tangible property

“If you plan to gift some property to a charity or NGO, you might not be required to pay any stamp duty depending upon your state. But, legal consultation is highly advised in such cases, because not all NGOs are allowed to accept gifts,” says Advocate Tanuj Agrawal.

There are some benefits that can be attributed to the Gift Deed. Since gifts are made during the lifetime of the donor, they are beneficial if you want someone specific to look after your properties or maybe if you need to help someone, you can transfer your property as a gift. Also, if there is a good chance that legal troubles could gather around the property, some people make a Gift Deed and avoid such litigations.

Can a Gift Deed be revoked/canceled?

However, under Section 126 of the Transfer of Property Act, 1882 there are certain grounds when gifts can be revoked. The revocation in itself incorporates the cancellation of the Gift Deed and the possession of the property is returned to the donor. The grounds are –

A gift once made and registered with due process of law cannot be revoked. After the acceptance, it becomes the property of the donee. The donor cannot independently revoke the deed. Also, 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.

  1. If there is an agreement between the donor and donee, that if certain specified events happen or do not happen, the gift shall be revoked. The point to note here is that the occurrence of such an event should not be controlled by the donor. And both parties must have agreed to such a condition in terms of the Gift Deed.
  2. The conditions stipulated should not be immoral, illegal or reprehensible to the property.
  3. In case of Thakur Raghunathjee Maharaj v. Ramesh Chandra, Hon’ble Supreme Court state that “even though a condition is not laid down in the Gift Deed itself, and has been provided under a mutual agreement separately but forms part of the transaction of the gift, the condition would be valid and enforceable”.
  4. Another instance, when a gift can be revoked is, if they violate Section 19 of the Indian Contract Act, 1872 which says “Where consent to an agreement is caused by coercion, undue influence, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so obtained”.

So if the gift was made by obtaining consent on the above grounds it can be revoked. And in case, the donor dies, his heirs have the right to file for revocation of the deed.

What are the tax implications of gifting a property?

Under Income Tax Act 1961, Section 56(2)(x), where any person receives from any person after the 1st day of April 2017 any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum shall be taxable under the head "Income from other sources". The given clause shall not apply to the following persons mentioned underneath:-

  1. from any relative; or
  2. on the occasion of the marriage of the individual; or
  3. under a will or by way of inheritance; or
  4. in contemplation of death of the payer or donor, as the case may be; or
  5. from any local authority
  6. 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
  7. from or by any trust or institution registered under section 12A or section 12AA; or
  8. 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
  9. by way of transaction not regarded as transfer under clause (i) or 20[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
  10. from an individual by a trust created or established solely for the benefit of the relative of the individual.

What are the tax implications of gifting a property?

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Gift Deed and Will are used for the same purpose but in a different way. Will operates only after the death of the testator and within his/her lifetime, it can be revoked or changed multiple times. Also, Will doesn’t need to be registered; only the testator signature is sufficient.

Whereas Gift Deed once registered cannot be revoked. It is more beneficial in cases, where one fears that after his/her demise there will be tension among family members regarding property ownership. It is much better to transfer property through Gift Deeds so as to avoid any future legal dispute or family troubles. Also, since Gift Deeds are registered documents, they serve as valid legal proof in case any dispute arises at a later stage.

Frequently Asked Questions

A Gift Deed is a legal document that represents a transfer of gift from one person to another as per the provisions of the law. Gift Deed is a legally binding written document defined in Section 122 of the Transfer of Property Act, 1822, through which the donor can transfer an existing movable or immovable property to the donee voluntarily.

A Gift Deed is valid only if it is given out of love and affection, without any consideration in return by one family member/ friend to another. Also, under Section 17 of the Registration Act, 1908, it is mandatory to have a registered Gift Deed when you want to transfer immovable property.


Important clauses in a Gift Deed

All disputes however are not arbitrable and there are certain disputes which fall outside categories of arbitrable disputes as held by the Hon’ble Apex Court in the matter of Booz Allen and Hamilton Inc V. SBI Home Finance Ltd.


Who can be a donor/donee?

A donor is a person who makes the transfer of immovable property. Any person who is of sound mind and is competent to enter into an agreement can be a donor. A minor cannot be a donor as he/she is not capable of entering into a contract.

A donee is a person who accepts the gift/transfer made to him. A minor can be a donee however, the gift would have to be accepted by donee’s guardian 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.

  Is registration of Gift Deed compulsory?

  Can a minor be the donee?

  How is a gift different from a sales deed?

  Is there an exchange of money involved in the Gift Deed?

  Can Gift Deed be challenged in court?

  Can Gift Deed property be sold?

  Who can challenge a registered Gift Deed?

  How to revoke a Gift Deed?

  What if you want to gift your property after your demise?

  What if the donee does not accept the gift?

  Can the donor claim back the gifted property?

  Is Gift Deed a legal document?

  Is there a tax implication on the Gift Deeds?

  Does the donee have to pay stamp duty after receiving the Gift Deed?

  What are the Pros and Cons of Gift Deed over Will