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Diving into Gift Deed for Real Estate: An Overview for Property Investors

By Lodha

There are indeed as many kinds of real estate transactions as there are properties. Each real estate transaction differs from another in terms of the property in question and how it is being transferred between parties. One of the more popular ways of transferring immovable property is via a gift deed. If you're unfamiliar, a gift deed is an agreement that allows a person to bestow his/her property or money to another as a gift. Two important points to note about a gift deed are that you can execute it for both movable and immovable property, and any transfer it facilitates is voluntary. If you execute a gift deed, it is crucial to get it registered since it acts as evidence in case any future dispute arises and is a tool that delineates succession. However, a gift deed must be registered and comes with stamp duty implications. If you want to learn more about gift deed stamp duty and registration charges, our explainer comprises everything you need to know.

Understanding Gift Deed's Stamp Duty as Per the States

In India, the gift deed format outlines the legal framework for transferring ownership of a property or asset as a gift between parties. Whenever you register a legal document, especially concerning property, you have to pay a tax called stamp duty that varies from one state to another. Here's what the stamp duty on gift deed in each state is in 2024:

As is obvious from the table, the stamp duty charges for git deeds range between 2%-7%, regardless of the state where you get it registered. In many states, stamp duty on gift deed in blood relations is waived off or levied at a concessional rate. For instance, in Maharashtra, if a person gifts residential or agricultural land to their spouse, children, grandchildren or their son's widow, the gift of property stamp duty will be a maximum of Rs 200.

Calculating Stamp Duty on a Gift Deed

Knowing the rate levied by your state is only the first step in calculating stamp duty charges for a gift deed. To accurately calculate property gift deed charges, you need to apply the rate levied by your state to the value of the said property. It is also important to remember that the stamp duty on a deed of gift property is paid by the giver/donor and not the receiver/donee. If the receiver were to pay stamp duty, the transfer would not be deemed as a gift and would count as a sale.

For instance, in Maharashtra, the stamp duty percentage is 3%, and suppose the property total cost is 1 Crore. So, the stamp duty will be 3% of 1 Crore, which is 30 Lakhs. This is to be paid for registering the gift deed.

Legal Mandates Related to Gift Deeds

As per the provisions of the Transfer of Property Act, you must get a gift deed registered. Either you or someone acting on your behalf must sign the registration document, and two witnesses have to attest to the same. Speaking plainly, you cannot simply gift a property without completing the legal procedure. When you go to register your gift deed, the registrar will also ensure that the correct stamp duty is affixed to the document when you present it for registration. Apart from stamp duty, you also must pay registration charges associated with a gift deed. As far as gift deed registration charges are concerned, most states levy a rate of 1% of the property cost. However, certain states levy a standard fee as registration charges for gift deeds.

A gift is one of the more hassle-free ways of transferring property, especially if you're working with a tight time frame. Gift deeds come into effect immediately, helping you transfer the property quickly. Additionally, you can execute gift deeds easily to ensure that you have proof of transfer and ownership in case any legal disputes arise.

Gift Deed Registration: Key Steps

To make a gift deed legally valid, follow these essential steps:

Prepare the Required Documents:

• Donor’s ownership proof (title deed or similar)
• ID and address proof of both donor and donee
• Encumbrance certificate (to confirm no legal dues)
• Sale deed copy (if applicable)
• ID/address proof of two witnesses

Visit the Sub-Registrar Office:

Both parties, along with two witnesses, must be present to sign the deed. Applicable stamp duty is paid here.

Verification and Registration:

The Sub-Registrar verifies all documents. Once approved, the deed is registered, and a certified copy is issued as legal proof.

Advantages of Using a Gift Deed

A gift deed offers a legally sound and emotionally meaningful way to transfer property to loved ones. Here are some key benefits:

Clear Legal Ownership

It enables the transfer of property without monetary exchange, ensuring legal clarity and reflecting the donor’s personal intent.

Dispute Avoidance & Succession Planning

Once registered, a gift deed prevents future claims on the property, reducing the risk of disputes and supporting smooth succession planning as per the donor’s wishes.

Financial Efficiency

In many states, stamp duty on gift deed—especially between family members—is lower, making it a cost-effective alternative to other forms of property transfer.

Tax Implications of a Gift Deed

Exemptions

Gifts to specified relatives (parents, spouse, siblings, etc.) are not taxable, regardless of value.

Non-relatives

Gifts over �50,000 are taxable as income for the recipient.

Capital Gains

No tax at the time of gifting. But if the recipient sells the property later, capital gains tax applies, using the donor’s original purchase cost.

Gift Deeds for Special Cases

Multiple Co-owners

If a property has multiple owners, all co-owners must consent and sign the gift deed for the transfer to be valid. This ensures mutual agreement and avoids disputes.

Minor as Donee

When gifting to a minor, a legal guardian signs on their behalf and manages the property until the child turns 18, after which full rights transfer to the child.

NRIs Gifting Property

NRIs can gift residential or commercial property in India, subject to FEMA compliance. They must also pay relevant stamp duties and taxes, though DTAA rules may apply based on their country of residence.

Agricultural Land Transfers

In some states, only agriculturists can receive agricultural land as a gift. For example, in Maharashtra, gifting to a non-farmer is restricted by law.

Gift Deeds: Real Examples & Key Takeaways

Practical Scenarios:

• A father gifted a family-owned property to his son during his lifetime, with full family consent. This helped avoid inheritance disputes and ensured a smooth transition.
• An NRI gifted a residential property to a relative, following FEMA guidelines and completing the documentation properly—resulting in a hassle-free transfer.

Dispute Cases:

• A gift deed was challenged on grounds of coercion but upheld in court after evidence confirmed it was voluntary.
• Another deed was revoked because the recipient failed to meet stated conditions, such as caring for the donor. The court supported the revocation as the conditions were clearly included.

Best Practices:

• Draft the deed with a legal expert
• Clearly mention any conditions
• Get consent from co-owners or legal heirs, if applicable
• Complete registration and keep copies of all documents

Frequently Asked Questions

1. What is a gift deed in India?

A gift deed in India is a legally binding document used to transfer ownership of property to another individual without involving any payment or financial exchange.

2. Who can gift property to whom in India?

In India, any property owner can voluntarily gift property to a family member or non-family member, including both adults and minors, through a registered gift deed.

3. Are gift deeds taxable?

Gifts received through a gift deed are not taxable if they are from specified relatives (like parents, spouse, children, siblings, etc.) or received on occasions like marriage or inheritance.

However, if a property or cash gift is received from a non-relative and its value exceeds �50,000, it becomes fully taxable as income.

Note: Stamp duty and registration charges apply at the time of executing a gift deed.

4. What does the gift deed format from father to son entail?

A gift deed from a father to his son in India typically outlines the details of both parties, the father’s voluntary intent to gift the property without any consideration, and a clear description of the property. It also affirms the son’s right to possess and enjoy the gifted asset. The deed must be signed by both parties and two witnesses, and registered with the appropriate authority to be legally valid.