Gift Deed Format in India

A gift deed is the legal document through which any person can transfer or gift his/her property. Only when the gift deed is registered, will the gift of a property be valid and legal. The gift deed is the instrument through which the immovable or movable property owner transfers his/her property to another person for free or without any money.

Continue reading to know:

• Gift deed meaning
• Contents required to be present in the gift deed
• Gift deed format in India
• Parties involved in a gift deed
• How to register a gift deed?
• Taxation on gifted properties

Gift Deed Meaning

In India, gifts are governed by the Transfer of Property Act, 1882 (“Act”). A gift of a property involves transferring the ownership of one’s property to another person through a gift deed. The gift deed is the document that contains all the provisions related to the gift. The person gifting his/her property is called the donor, and the person accepting the gift is the donee. 

For a gift to be legal and valid, the donor must voluntarily gift/ transfer the property to the donee without any consideration, i.e., the donor should not receive anything from the donee for making the gift. The donee should accept the gift within the lifetime of the donor for the gift to be legally valid.

The gift deed must be registered with the Registrar or Sub-Registrar's office for it to be recognised under the law. When the gift deed is registered, the transfer of the property from the donor to the donee takes place immediately, and the parties need not go to court for its execution. 

Clauses in a Gift Deed

• Details of Donor and Donee – The gift deed should mention the name, address and relationship between the donor and donee. 
• Consideration – The gift deed should mention that the donor is transferring the gift property out of love and affection towards the donee, and there is no consideration of any other type involved in the transfer. 
• Voluntary Transfer – The gift deed should mention that the donor is voluntarily and freely transferring the ownership of the gift property to the donee. The transfer shall be free of any fear, coercion or threat. 
• Ownership of Property – The gift deed should mention that the property is in existence and the donor is the absolute owner of the gift property, and the donor has delivered the possession of the gift property to the donee. 
• Property Details – The gift deed should specify the detailed description of the gift property. 
• Rights of the Donee – The gift deed should mention the rights of the donee. It includes the rights of the donee to enjoy the property peacefully and sell or mortgage or lease the property. 
• Acceptance by Donee – The gift deed should mention that the donee accepts the gift of the property.
• Delivery – The gift deed should mention the intention of delivering the possession of the gift property, expressly or impliedly. 
• Witnesses – The gift deed should mention the name and address of the witnesses. It should be signed and attested by at least two witnesses mandatorily.
• Revocation – The gift deed need not have a revocation clause of the gift property, but it is advisable to avoid any conflict in the future.

Gift Deed Format

Download Gift Deed Format

Sample Format of a Gift Deed

Below is the sample of the gift deed format. Click on the link provided above to download the entire format of a gift deed:

Parties in a Gift Deed

There are mainly two parties in a gift deed, i.e., donor and donee. The donor is the person who gifts his/her property, and the donee is the person to whom the property is gifted. The donor should have a sound mind and must be competent to enter into agreements at the time of making the gift deed. 

A minor is incapable of gifting property as he/she is incapable of entering into agreements. However, the guardian of a minor can accept the gifts given to a minor on his/her behalf.

Properties That can be Gifted Through a Gift Deed

Both immovable and movable properties can be given away as gifts by the donor. Immovable property means: 

• Land 
• Building
• House
• Flat
• Any benefits arising out of land or anything attached to the earth 

However, immovable properties does not include growing crops, standing timber or grass. The properties that are not considered immovable properties are considered as movable properties. Movable properties includes cash, jewellery, vehicles, clothing, cash, furniture, electronics, etc..

However, the donor can gift only the properties that are existing at the time of registering the gift deed. He cannot gift the property which he expects or will get in future. The donor can gift only the properties of which he/she is the lawful owner. The donor must be owning the property of the gift at the time of making the gift.

Registration of Gift Deed

Under Section 123 of the Transfer of Property Act, 1882, the gift of immovable property is valid when gifted through a registered gift deed signed by the donor and the donee and attested by two witnesses. Thus, registration of the gift deed is mandatory when the donor wishes to gift immovable property to the donee. 

The gift of movable property is valid when gifted under a registered gift deed or by giving delivery of the property to the donee. 

Here is the process of registration of a gift deed:

Step 1: Draft the gift deed containing all the clauses (as mentioned above) on stamp paper. 

Step 2: Both the donor and donee should sign all pages of the gift deed. It must be signed by at least two witnesses.

Step 3: Pay the stamp duty on the gift deed. The value of the stamp paper on which the gift deed is executed varies from state to state.  

Step 4: The parties of the gift deed and the two witnesses should visit the Registrar or Sub-Registrar’s office under whose jurisdiction the property to be gifted is situated. Take a prior appointment at the Registrar or Sub-Registrar’s office for registration, if required. If the property is movable, visit the Registrar or Sub-Registrar’s office of the area where the donor resides.

Step 5: The respective authorities in the Registrar or Sub-Registrar's office will verify the gift deed and the documents, check the stamp duty payment and register it.

Step 6: The Registrar or Sub-Registrar's office will issue the registration certificate. 

Documents Required for Gift Deed Registration

Here are the documents you need to submit at the Sub-Registrar's office for registration of a gift deed:

• Original gift deed executed on a stamp paper
• Identity proof of donor and donee
• PAN card of the donor and donee
• Identity proof of the witnesses
• Proof of ownership of the property to be gifted, such as sale deed or title deed

Tax Implications of Gift Deed

Gifts are taxed under Section 56(2)(x) of the Income Tax Act, 1961, after 1 April 2017. Under Section 56(2)(x)(a), when any person receives a sum of money exceeding Rs.50,000 without consideration as a gift, then the whole of the gift amount will be taxed in the hands of the donee under the head ‘Income from other sources’. 

Under Section 56(2)(x)(b), when a person receives an immovable property without consideration as a gift, and the stamp duty value of the gift deed exceeds Rs.50,000, then the stamp duty value of the property is taxable in the hands of the donee.

However, if the property or amount is received from any of the following persons, then the taxation on the gift is exempted, and the donee will not be taxed:

• If the gift is received from relatives, or
• If it is received on the occasion of the marriage of the individual, or
• If it is received under a will or by way of inheritance, or
• If it is received in contemplation of the death of the donor, or
• If it is received from a local authority (defined in Explanation to Section 10(20) of the Income Tax Act), or
• If it is received from any fund, university, foundation, other educational institution, other medical institution, hospital, trust or institution referred under Section 10(23C) of the Income Tax Act, or
• If it is received from any trust or institution registered under Section 12A or 12AA, or
• If it is received by an individual (donee) from a trust established or created solely to benefit the individual’s relative.

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