7 points to remember while gifting of a property to someone

1. A gift deed

Defined under Section 122 of the Transfer of Property Act, 1882, any immovable property can be transferred through a gift deed. Similar to a sale deed except that no money is paid in the transfer of the property, a gift deed too has to be registered with the sub-registrar office under section 17 of the Registration Act, 1908, and as per section 123 of the Transfer of Property Act. Failing to do this, would render the contract invalid.

2. Parties

The person giving the gift is known as the donor and the one receiving the gift is known as the donee. For the gift to be valid, the gift should be made and accepted during the lifetime of the donor and the donee.

3. Deed of gift

If an immovable property is being given as a gift, it amounts to transfer of property and must be made in writing through a gift deed. This deed needs to be signed by the donor and the donee in the presence of two witnesses.

4. Revocation of gift

Unless there is a pact between the contracting parties stating that the gift can be revoked on the occurrence of a certain event, a gift can’t be revoked. Section 126 of the Property Transfer Act provides for situations wherein a gift deed may be revoked by the donor. It’s often advised to add a clause of revocation while executing a gift deed in order to avoid glitches.

5. Taxation on gift

Under Section 56 (2) (vii) of the Income Tax Act, 1961, a gift is not taxable if it is received by an individual or Hindu undivided family from any blood relative, as inheritance, as marriage gift or in contemplation of death. Under other circumstances if the aggregate of gifts received exceeds Rs 50,000 in a year, then the gift becomes taxable.

6. Registration of gift deed

A gift deed must be registered with the local sub-registrer office in the presence of both the parties concerned. A nominal registration fee needs to be paid along with the submission of the gift deed, purchase agreement with Index II of the property, society registration certificate, share certificate, and Aadhaar and PAN card of both parties.

7. Stamp duty

The stamp duty on gift deed varies from state to state. If the gift is being made to a close relative, a lower stamp duty is applicable, compared to normal transfer of property to some other person. While in Punjab, no stamp duty has to be paid, if the property is to be transferred between blood relations; the Maharashtra government charges a nominal Rs 200 if the property is gifted to blood relations such as parents, spouse or siblings.