A gift deed is a record that files the act of giving a gift and is achieved between the donor (the person giving the gift) and the donee (person receiving the gift).
Though it is not compulsory to enforce a gift deed while gifting any asset, it does create a valid documentary record. A gift can be movable or immovable property that is virulent and tangible.
A gift deed must be sign up by the donor, attested by 2 witnesses, and they should be registered or noted. Charges will differ in each state as stamp duty on gift deed must be paid on the worth of the property. Generally, such gifts are assumed by one family member to another, but there is no such limit. However, gifts from relatives (and wedding gifts) are exempted from taxes.
Drafting a gift deed As gifting is aunpaid action, the gift deed should position that the deed has been made freely and out of the donor’s own choice without any power or pressure. The deed should also declare that the donor is solvent (not bankrupt) and that the gift is being complete without any consideration.
Acceptance of deed The next stage is acceptance of the gift by the donee. Acceptance of the donee is noted in the gift deed by the donee’s signature and is also authenticated by acceptance of possession of the gift. Another key element to this step is that the acceptance of gift should happen through the life of the donor. The gift may be extracted invalid otherwise
Registration of deed Gifts that include immovable property should be registered under the Transfer of Property Act of India. Unless registration of the gift deed is finished, the title does not pass on to the donee, in instance of gift of immovable property. Stamp duty shall be payable based on the worth of the gift. To ascertain fair worth of the immovable property for calculation of stamp duty, approved govt. valuation experts will have to carry out valuation of the property.
POINTS TO LOOK AFTER:
- A minor is not capable of entering into a valid agreement, so the minor cannot make a lawful gift deed. The guardian of the minor can receive a gift made to a minor on his behalf.
- A gift once made cannot be revoked.
- Gifts made to relatives defined by Income Tax Act are exempted from tax in the hands of the donee.
- Clause for Consideration: It should be mentioned in the Gift Deed that there is no exchange of money or any other type of consideration is involved, and the transfer is being made out of love and affection. It will not be considered as a gift if it is relevant to how small the consideration is.
- Possession of Property: It would be best if you were the titleholder of that immovable property in your possession, i.e. the property you want to gift. The property must exist while making a gift because you cannot gift anything that you possibly can get in the future.
- Free Consent: The transfer should be free from any undue influence, coercion, fear, or threat. The gift should clearly state that transferor has a clear intention of doing so, and the transfer is voluntary
- Property Details: An exhaustive description of the property must be included, which may specify the address, structure, color, location, area, etc.
- Details of Donor And Donee: To justify, whether they are blood relatives or not, the relationship between donor and donee is important to note. Some state governments also offer a discount on stamp duty if gifts are made to blood families.
- Delivery Clause: A delivery clause, which would confirm the delivery of the possession of the property, generally talks about the actions of the transfer ‘expressly or implied’.
- Clauses For Revocation: It is advisable to avoid future complications; however, it is not a mandate. The donor and donee both have to agree on this clause, which needs to be mentioned, not implied.
- Signed and attested deed by witnesses
- Payment for stamp duty and registration charges
- Aadhar Card
- ID Proofs, like Driver License, Passport, etc
- PAN card of both the parties for the execution of Gift Deed.
- Original Gift Deed to be executed
- A paper like Sale deed to prove donor title to the Property
- You will require two witnesses at the time of execution of Gift Deed
- Encumbrance Certificate
- Other Agreements which you might have entered into concerning Property
- Other materials may require according to state requirements.
STEPS INVOLVED IN DRAFTING A DEED
Steps involved in drafting a deed are as follows:
Draft a deed with the following essentials.
- Mention the Date and Place for execution
- Information about Donor and Donee like Date of Birth, Residential Address, Name, and Relationship among them.
- A total description of the property
- Presence of Two Witnesses
- Signatures along with the witnesses of Donor and Donee
Get it printed on the stamp paper of applicable value contingent upon each state Stamp rate.
Lastly, kindly get Gift deed registered at your registrar/sub-registrar office.
Gift deed is voluntary action which makes sure that the deed has been made out donor’s own choice. And the process of gift deed registration is not a complex one though. But ASA is here to help you in every way possible.
ASA is a leading firm which will fulfill all your legal requirements without much government hassle and loads of paperwork.
We simplify the registration process for you. Our experienced professionals are very well aware of all the formalities involved.
We ensure to provide the best guidance and make sure that your communication with our representatives is smooth.