Points To Consider In A Gift Deed

As mentioned under Section 122 of The Transfer of Property Act, a gift deed is a legal document validating donating a gift signed by the donor and the donee. The gift deed contains information about the property, the donor, and the donee.

A registered gift deed is also proof in and of itself, and the transfer of property is instantaneous, and one does not need to travel to court to get it executed.

What gifts qualify under a gift deed?

Movable or immovable property and an existing transferable property can be donated and require a gift document. The donor mustn’t be bankrupt at the time of the transfer, and secondly that the item given as a gift should be tangible and transferrable.

Registration of a gift deed

The registration of a gift deed is necessary to be considered a legitimate transaction. The Gift Deed must be registered under Section 17 of the Registration Act, 1908.

Steps involved in drafting and registering a Gift Deed

1. Drafting must include donor and donee information, address, name, date of birth, relationship, specifications of the property, delivery details and
2. Signatures of the donor and donee in the presence of two witnesses
3. All of these details should be printed on stamp paper.
4. The deed must be submitted in the sub-registrar office for registration to be valid under the law.

Drafting a gift deed for registration

Because gifting is a free act, the gift deed should state that the donation was made voluntarily and without compulsion. The deed should also state that the donor is solvent (not insolvent) and that the gift is given without repayment expectations.

While drafting a gift deed, the following should be mentioned:

• Possession on the property
• Consideration clause 
• Property information
• Donor and donee details 
• Free will to be stated
• Rights of donee
• Rights and liabilities of the donee
• Revocation clause 
• Delivery clause

All of this information should be printed on stamp paper. While the Maharashtra Stamp (Amendment) Act, 2015  governs stamp duties, the Registration Act of 1908 regulates registration fees. Stamp duty charges in Maharashtra are – Family members: 3%, Other relatives: 5% and for Agricultural land/ residential property: Rs 200

It is necessary to register the deed with the sub-registrar office for it to be valid.

Documents required to register a gift deed

• Original gift deed
• Id proof
• Pan card
• Aadhaar card
• The sale deed of the property
• Other documents the agreements of the property.

Points to consider before registration of gift deed

• A minor (someone who is below 18 years of age) is incapable of entering into a legal contract. Therefore, a valid gift deed cannot be created. Though a minor’s guardian has the authority to accept a gift on his behalf.
• A gift initiated can’t be revoked.
• Gifts made to relatives by donee defined by the Income Tax Act are tax-free.