A Deed of Gift, also known as a Gift Deed, is a legal document used in India to transfer ownership of certain assets or properties from one person, known as the donor, to another person, known as the donee, within one's lifetime and without any exchange of money. It is a common way to gift assets to family members, friends, or other individuals, and it carries legal significance under the Transfer of Property Act, 1882, and the Income Tax Act.
Donor and Donee Details
The gift deed includes the names, addresses, and other identifying information
Description of the Gift
The deed clearly specifies the asset or property being gifted. This could include real estate, movable assets like vehicles, jewelry, or even financial instruments.
Transfer of Ownership
The document explicitly states that the ownership of the mentioned asset is being transferred from the donor to the donee.
Consideration
Unlike a sale deed, a gift deed does not involve any monetary consideration. It should mention that the transfer of assets is by way of a gift and not a sale.
Conditions and Restrictions
If there are any conditions or restrictions attached to the gift, they must be outlined clearly in the gift deed. For instance, the donor may specify that the property cannot be sold for a certain period.
Acceptance by Donee
The gift is complete only when it is accepted by the donee. The acceptance should be mentioned in the deed.
A Gift Deed in India comes under the Transfer of Property Act, 1882.
Under this act, the transfer of immovable property as a gift must be made through a registered gift deed, which should be undertaken at a local sub-registrar after paying the applicable stamp duty and registration charges.
Stamp duty differs from state to state, but is typically in the region of 5-6% of the market value of the property. There are some states where the rate is lower or higher, and some with specific exemptions for gifting between relatives, but in most cases stamp duty on gift deed is payable.
Registration fees will also be payable for gift deed registration.
It is important to note that if the donor and recipient are not related to one another, as per the provisions of the Income Tax Act, then the gift is taxable in the hands of the recipient (assuming it exceeds Rs 50,000). 'Related' has a specific definition for the purposes of gifts. E.g. first cousins are not considered to be relatives for tax purposes.
If a gift is taxable, the rate of tax will depend on the income tax slab applicable to the recipient. The amount that is taxable will depend on the nature of the gift (whether it is money, immovable property, or something else, like shares), calculated on the basis of the market value.
