A Gift Deed is a document that records the act of giving. Every transaction happening around us today has some legal impact. In the developed system there is a systematic way to recognize and record a lot of unilateral and bilateral transactions. A Gift Deed is a legal document that describes the voluntary transfer of gifts from the owner of the property to the receiver of the gift without any exchange of money. The owner of the property is called the Donor and the receiver of the property is called Donee. A person who wishes to gift something i.e. the donor must be solvent and should not use this tool for tax evasion and illegal gains.
A gift must be one of the following properties:
- It must be a properly defined existing moveable or immoveable property.
- It must be transferrable.
- It shouldn’t be a future property but an existing one.
Drafting of Gift Deed
Gift Deed is a contract between Donor and the Donee which defines simultaneous and reciprocal act of giving and taking. A gift to be valid must be made by a person voluntarily and not under compulsion without any exchange of money. Sabkuch legal has the best lawyers who expertise in drafting will.
Acceptance of Gift deed
Acceptance of the gift after its execution is a legal requirement and Donee must accept the gift during the lifetime of the donor. In case the donee fails to accept the gift, it is rendered invalid. Possession of the gift is an act which implies the acceptance.
Registering Gift Deed
The gift to be given can be tangible or intangible property, well defined movable-immovable property, transferable, and should be in existence. Unless registration of gift deed is completed, the tile does not pass to the done, in case of gift of immovable property. Attestation by two witnesses is required during registration and post-registration, title transfer is possible.
As per the provisions of the Registration Act, 1908, registration involves:
- Valuation of property being gifted by an approved valuation expert.
- Payment of Stamp duty and transfer duty – Stamp duty varies for women and men Stamp duty also varies from state to state
- It records the transfer of the property to the receiver.
- It has evidentiary value and acts as legal proof.
- It provides legal protection in case of any future disputes.
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Important Points to Note
- A minor is not capable of entering into a valid contract, so the minor cannot make a valid gift deed. The guardian of the minor can accept a gift made to a minor on his behalf.
- A gift once made cannot be revoked.
- Gifts made to relatives dine by the Income Tax Act are exempt from tax in the hands of the done
Frequently Asked Questions
Can a minor be a party to a gift deed?
Since contracts with a minor avoid ab into, and a gift deed is a legal contract, Minors are not eligible to be a donor and therefore a gift deed where the minor is the transferrer is not valid in the eyes of law. In a circumstance where the donee is a minor, a natural guardian has the right to accept the gift on his behalf.
What are the conditions when a gift can be revoked?
Section 126 of the Transfer of Property Act provides the essential ingredients for the revocation of a gift. For talking about the stage where the revocation comes into pictures the property needs to be registered first; and the existence of an agreement between the contracting parties stating that the gift can be withdrawn on the occurrence of particular events. It is advisable to add a clause of revocation while executing the Gift Deed.
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Who pays the dues after a property is gifted?
Once the property is registered in the name of the recipient, he is responsible for paying the remaining dues. Let’s assume, R got an apartment from his father. His father had to pay Rs 20,000 as utility bills. Now, R will be liable to clear the remaining dues.
How is Gift Deed different from a Will?
The Gift Deed is executed during the lifetime of the donor and transfer happens immediately. In a will, the transfer occurs after the death of the owner. Additionally, the Gift Deed needs to be registered. Transfer using Gift Deeds are tax-free. The Gift Deed is irrevocable post-execution. However, the will can be changed as many times as you want. There is an extra cost in the form of stamp duty in case of a Gift Deed.