GIFT DEED

GIFT DEED

In the English language, the above paragraph can be paraphrased as follows: A gift deed is a legal instrument that transfers ownership of a property or asset as a gift from one person to another without the exchange of any money or other benefits. The donor refers to the person initiating the gift, while the recipient is known as the donee.

The common application of a gift deed is to present fixed properties including land, building, or a house, however, it can also be utilized to give movable assets like shares, jewelry, and vehicles. To ensure legal validity, the deed must be written on a non-judicial stamp paper and recorded with the proper organization.

After a gift deed is signed and officially recorded, the giver gives up all power and ownership of the gifted property, while the recipient gains complete control over it. It is crucial to understand that a gift deed cannot be withdrawn or invalidated once it has been signed, unless certain circumstances, like misconduct or unlawful pressure, occurred.

 

ELEMENTS OF GIFT DEED:

The crucial components of a deed of gift comprise:

  1. Explanation of the Present: The transmission should unambiguously specify the property or resource that is being bestowed. This should encompass information like the location, borders, size, and any other significant details that are needed to determine the asset.
  2. When creating a legal document, such as a deed, it is important to clearly identify both the person giving the property (donor) and the person receiving it (donee). This means including their complete names, addresses, and any other information that will help distinguish them.
  3. Explanation: When transferring ownership through a gift deed, no money is exchanged. It is a free gift. However, to ensure that the deed is legally binding, a small amount of money, like Rs.10, can be included as nominal consideration.
  4. The donor’s intention to make a gift must be evident in the deed, which must explicitly mention that the transfer of ownership is solely a gift and not part of any transaction or agreement.
  5. The recipient’s approval of the gift should be stated in the deed, as it is a crucial factor in making the gift legally binding. The gift has no legal basis until the recipient accepts it.
  6. To make a gift deed legally binding and valid, it needs to be registered with the relevant authority, following the applicable laws. This registration is crucial to ensure that the ownership transfer is recognized and enforceable in a legal context.

It is crucial to incorporate all the key components of a gift deed in order to establish its legality and enforceability.

TYPES OF GIFT DEED:

There are two primary types of gift deeds in India.

  1. A Gift Deed with Consideration is a legal document in which a property or asset is transferred from one person to another in exchange for a small amount of consideration, typically Rs.10. This type of deed is utilized to establish a legal relationship between the parties and confirm the validity of the transfer of ownership. The inclusion of consideration makes this deed enforceable by law.
  2. Translation: The Gift Deed Without Consideration refers to the transfer of a property or asset from one individual to another without any monetary exchange or compensation. This gift is a genuine expression of love and affection, and it is commonly utilized in family-related transactions where parents gift a property to their children or when a family member gifts a valuable asset to another family member.

It is crucial to understand that both categories of donation certifications require an execution on a non-judicial stamp paper, followed by registration with the relevant authority to be binding in the eyes of the law. The stamp taxes and registration charges are subject to change based on the value of the property or asset that is offered and local legislation applicable in the state where the donation certification is carried out.

 HOW TO MAKE GIFT DEED IN INDIA?

If you want to create a gift deed in India, you can adhere to the subsequent instructions:

  1. To initiate the process of gifting, the initial step is to create a written document called a gift deed. You can undertake this task on your own or choose to seek the assistance of a legal professional. It is important to ensure that the deed contains all the necessary information, such as a detailed description of the gift, the names of the parties involved, the consideration, the intention to gift, acceptance by the recipient and registration particulars.
  2. You need to obtain a non-judicial stamp paper of the correct denomination according to the laws of your state after creating the gift deed.
  3. To finalize the gifting process, both the giver and the receiver should sign a document called the gift deed while being watched by two other people. The witnesses must also sign the same document and provide their complete personal information.
  4. To make the gift deed legally valid, it is necessary to get it registered with the appropriate authority in accordance with the laws of the state. Payment of stamp duty and registration fees based on the property or asset’s value being gifted is required.
  5. After registering the gift deed, the registration authority will provide you with an official registered copy. This document serves as evidence of the ownership transfer, and it is important to keep it safe.

Please be aware that the procedure for creating a gift deed may differ a little based on the laws in your state. It is recommended to seek the assistance of a lawyer or a licensed document writer to guide you throughout the process and confirm the authenticity of the deed according to the law.

DOCUMENTS REQUIRED:

  • The initial legal document of the real estate that is being donated.
  • Proof of identity for both the giver and receiver, which may include government-issued documents such as a PAN card, Aadhaar card, or passport.
  • Documentation demonstrating the address of the giver and the receiver, such as a statement from a financial institution or a utility bill.
  • Two pictures that are the size of a passport, showing the donor and receiver.
  • can be obtained from authorized vendors in order to execute various types of legal documents. These documents may include agreements, bond papers, affidavits, and power of attorney. The value of the stamp paper varies depending on the type of document and the monetary value involved. These stamp papers can be used as proof of payment of the required legal fees and can help to avoid legal disputes. It is important to obtain the correct value of stamp paper and to ensure that it is duly signed and executed in the presence of witnesses. Legal documents can be signed using a non-judicial stamp paper with the appropriate value, which can be bought from authorized vendors. This type of paper is suitable for various agreements, bond papers, affidavits, and power of attorney. The value of the stamp paper depends on the document type and value involved. It acts as evidence of payment for legal fees and can prevent legal disputes. It is crucial to obtain the correct stamp paper value, sign it appropriately, and execute it in front of witnesses.
  • Copy of the property card
  • Copy of the latest property tax receipt

 

COST AND TIME INVOLVED: 

The price of creating a gift deed in India is determined by the property’s value and the relevant stamp duty and registration fees. These fees may differ from region to region and can be anywhere from 1% to 8% of the property’s worth. The amount of time it takes to create a gift deed may also differ from location to location, but the registration procedure typically takes 2-3 weeks to complete.

 

ADVANTAGES:

  • The transfer of ownership without the exchange of money.
  • Helps in avoiding disputes in the family
  • Gift transactions are not subject to income tax or gift tax, which means they provide tax advantages.
  • This can serve as a means for organizing one’s assets in preparation for future inheritance.
  • It is simple to create and file, with assistance from a legal professional or a writer of documents.

 

DISADVANTAGES:

  • Once a gift deed has been made, there are limited circumstances in which it can be invalidated, such as if it was obtained through dishonesty or force. Otherwise, it cannot be undone.
  • If the individual who has received the gifted property decides to sell it in the future, they may be obliged to pay taxes on the gains that they have earned through the sale.
  • When the recipient sells the gifted property, they may be responsible for paying stamp duty and registration fees.

 

LEGAL REQUIREMENTS AND RULES:

In India, there are certain laws and regulations that must be followed when creating a gift deed.

  1. In order to make a gift of property, the individual providing the gift must possess a title that is unambiguous and can be easily sold in the market.
  2. To ensure compliance with state laws, the gift deed should be completed on a non-judicial stamp paper and officially registered with the relevant authority.
  3. It is important to be meticulous when creating the deed, ensuring that it covers all necessary components such as a clear explanation of the gift, the identities of all individuals involved, the agreed upon compensation, a clear intention to give, confirmation of the donee’s acceptance, and verification of the registration process.
  4. In order for the recipient to receive the gift, they must agree to it and express their agreement in writing.
  5. Two witnesses must be present when the deed is signed.
  6. Both the giver and the receiver need to possess legitimate identification and address documents.

It is essential to understand that a gifted property cannot be undone or annulled after the gift deed has been signed, except in specific situations such as through force or deceit. If the donee decides to sell the gifted property in the future, they might be subject to capital gains tax. Additionally, they might also have to pay stamp duty and registration fees when selling the gifted property.

To ensure that the gift deed is legally valid, it is recommended to seek assistance from a lawyer or a document writer during the process.

 

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