What is Gift Deed: Registration and documents required

25 OCTOBER, 2024

Apart from being a material exchange, gifting is part of Indian culture, which embodies sharing and generosity. However, a property transfer gift must follow a legal process through gift registration. A gift deed is a legal document that legally registers a property transfer . The following sections will explain and the documents required for one.

What is a Gift Deed?

As the gift deed suggests, it is a legal document a person uses to voluntarily gift a movable or immovable property to another person. By registering the gift transfer, the document minimizes the chance of property disputes, especially in inheritance cases.

It is a valuable document for inheritance matters different from a 'Will.' Unlike a 'Will,' a gift deed becomes active immediately, and the gift deed registration charges vary by state government rules. The person gifting the property is the donor, and the recipient is the donee.

Which Properties Can You Transfer Using a Gift Deed?

A donor can use a gift deed to transfer any movable or immovable property. According to rules, an immovable property is anything attached to the earth or land, not including grass, standing timber, and growing crops. Properties other than this definition fall under the category of movable properties.

A donor can transfer property using a gift deed under the following conditions:

A donor can transfer any movable or immovable property as a gift
The property must be transferable
The donor should be the property’s sole legal owner
The property must not be of any future occurrence
Tangible properties are eligible for transfer using a gift deed

The Role of Gift Deeds in the Transfer of Property Act

The Transfer of Property Act 1882 defines the meaning and requirements of a gift deed. According to the act, the donor must transfer the property to a donee without any financial considerations. The donee must also receive the gift within the donor's lifetime.

The Act specifies the deed becomes active only after it is registered at the registrar or sub-registrar’s office. After the gift deed registration, the property transfer takes place immediately. Moreover, the Act mentions the gift deed's validity. It is valid only if the donor is the property’s lawful owner, has a clear title, and wants to gift it voluntarily without any monetary consideration.

How to Draft a Legally Binding Gift Deed?

After understanding what a gift deed is, follow these steps to draft a legally binding document:

Mention the date and place of deed execution at the top.
Mention relevant information about both parties, including their names, addresses, dates of birth, and signatures.
Mention the complete property details.
Get the signatures of two witnesses on the deed.

Print the draft on stamp paper and take it for gift deed registration at a registrar or sub-registrar’s office.

What are the Rules for Gift Deeds?

Here are a few rules for gift deeds:

The donor should not have any monetary interest when gifting the property.
Both parties should be present at the time of gift deed registration.
Both the donor and the donee should be adults.
The property being gifted should be an existing and tangible property.
The donor should have a clear title of ownership for the property.
The property should be registered, and the donor must provide relevant documents for the gift deed.
Both parties should check and register the deed under the Indian Registration Act 1908.

What are the Advantages of a Deed of Gift?

These are the most important advantages of a gift deed:

Legalises the Gift: A gift deed legalises the gifting process by enclosing complete details about the property and the parties involved.
Acts as Legal Proof: The deed acts as legal proof when confronting a legal dispute in a court proceeding.
Provides Tax Exemptions: A gift deed provides tax exemption up to a certain limit.
Revocation Benefit: Under Section 126 of the Transfer of Property Act, 1982[1], the owner can cancel a deed of gift with immediate effect.
Ensures Absolute Ownership: A gift of deed ensures a property’s absolute ownership for the gift recipient.
Quick Property Transfer: With a gift deed registration, the property transfer takes place immediately, unlike a 'Will'.

How to Register a Gift Deed?

Follow these instructions for gift deed registration:

Prepare the Documents: Before heading to the registrar or sub-registrar’s office, keep all documents for the gift deed in order, including the deed draft, ownership proof, identity proofs, etc.
Pay the Stamp Duty: Stamp duty is a government-imposed tax necessary for gift deed registration. The amount varies by property location, value, government rules, prevailing rates, etc.
Visit the Office: Both parties must visit the registrar or sub-registrar's office with two witnesses. The registrar or sub-registrar will verify the documents, check the stamp duty payment, and oversee the deed signatures.
Registration Certificate Issuance: After successful verification, the office will issue a registration certificate that serves as proof of gift deed registration.

Gift Deed Registration: Documents Required

These are the documents required for the gift deed:

Both parties’ identity proof, including PAN card, Aadhaar card, driving license, etc.,
NOC in case of agricultural land
An affidavit stating the deed’s validity as regulated by 22A of the Registration Act, 1908
Encumbrance certificate