What is a Gift Deed? Meaning, Registration, And Required Documents Explained

You’re in the right place if you’re curious about gift deeds. Let’s break it down step by step so you can make informed decisions about your finances and assets.

What is a Gift Deed?

A gift deed is a legal document that allows a property owner (the donor) to voluntarily transfer ownership of movable(such as land, houses, or apartments)  or immovable property to another person (the donee) without any monetary exchange. 

For example, if you want to gift your house, land, or even shares to your child or a family member, a gift deed is the way to do it. It’s a popular option for women who want to secure their family’s future or transfer assets to their loved ones. Additionally, some service platforms offer a “refer and earn money” program, rewarding you when you share this beneficial option with others.

This transfer is made out of love, affection, or goodwill and is governed by the Transfer of Property Act, 1882. It’s essential that the gift is accepted by the donee during the donor’s lifetime; otherwise, it’s considered invalid.

Why Consider a Gift Deed?

A gift deed is a great way to transfer property during your lifetime. Here’s why you might consider it:

1. Immediate Transfer: Unlike a will, which takes effect after the donor’s demise, a gift deed facilitates the immediate transfer of property.
2. Legal Clarity: A registered gift deed provides clear evidence of the transfer, reducing potential disputes in the future.
3. Tax Benefits: Gifts to specified relatives may be exempt from tax, offering financial benefits.
4. Strengthens Family Bonds: It’s a way to show love and care for your loved ones.

Key Conditions for a Valid Gift Deed

For a gift deed to be legally valid under the Transfer of Property Act, 1882, it must meet the following conditions:

• The property must exist at the time of the transfer.
• The donor must have legal ownership of the property with a clear title.
• The transfer must be made voluntarily, without force or undue influence.
• The donee must accept the gifted property.
• The gift must not involve any financial or material consideration.

What Does ‘No Financial or Material Consideration’ Mean?

A gift deed is a voluntary transfer of property or assets without any exchange of money, goods, or services. If the donor (giver) receives any form of payment or compensation, the transaction is not considered a gift but a sale or exchange, making the deed legally invalid.

Examples:

Valid Gift Deed: A mother gifts her house to her daughter out of love and affection, without taking any money or assets in return.

Invalid Gift Deed: A father gifts a property to his son but, in return, asks for ₹10 lakh or a share in his son’s business.

Essential Components of a Gift Deed

A properly drafted gift deed should include the following details:

1. Transfer of Property at Free Will: The deed should explicitly state that the transfer is being done voluntarily by the donor.
2. Details of Donor and Donee: Full names, addresses, and relationships between the donor and donee should be mentioned.
3. Consideration Clause: It should clearly state that the gift is given out of love and affection without any exchange of money.
4. Property Description: The deed must include detailed specifications of the gifted property, such as dimensions, location, and any other identifying details.
5. Donee’s Rights: The gift deed should specify the donee’s rights over the property, including their ability to sell, lease, or mortgage it.
6. Acceptance Clause: It must explicitly state that the donee has accepted the gift.
7. Witnesses: The deed must be signed in the presence of at least two witnesses, whose names and addresses should be included.

Registering a gift deed is crucial to make it legally valid. Without registration, the transfer of property won’t be recognized by the law. 

To make a gift deed legally enforceable, it must be registered at the Registrar or Sub-Registrar’s office. The process includes:

• Preparing the deed on stamp paper (stamp duty varies by state).
• Signing the deed in the presence of witnesses.
• Submitting required documents.
• Paying the applicable registration fee.

Documents Required for Gift Deed Registration

To register a gift deed, the following documents are typically required:

• Original Gift Deed (drafted and signed by the donor and donee)
• Identification Proofs (Aadhaar, PAN, etc. for both parties)
• Property Ownership Proof (sale deed, title deed, or other legal documents)
• Passport-size Photographs of donor and donee
• Witness Identification and Address Proofs

Property Gift Deed Rules

Understanding the rules governing gift deeds can help in making informed decisions:

• Irrevocability: Once executed and registered, a gift deed generally cannot be revoked unless specific conditions for revocation are mentioned within the deed.
• Tax Implications: While gifts to certain relatives are tax-exempt, gifting property to non-relatives may attract tax. It’s advisable to consult a tax professional to understand the implications fully.
• Conditional Gifts: Imposing conditions on the gift is possible, but they must be clearly stated in the deed.

Gift Deed vs. Will: Key Differences

Many women wonder how a gift deed is different from a will. Here’s a quick comparison:

Aspect	Gift Deed	Will
Transfer of Ownership	Ownership is transferred immediately upon registration with the Registrar or Sub-registrar’s office.	Ownership is transferred after the demise of the testator (person making the will).
Revocability	Generally Irrevocable, but can be revoked under specific circumstances (e.g., fraud. coercion, undue influence) as per the Transfer of Property Act, 1882.	Can be revised or revoked by the testator(person making the will). at any time before their demise.
Legal Validity	Requires registration to be legally valid and enforceable.	Registration is not mandatory but recommended for stronger legal standing. It must be in writing. Signed by the testator, and witnessed by at least two people.

Tax Implications on Gift Deeds

Under the Income Tax Act, 1961, gifts exceeding Rs 50,000 received from non-relatives are taxable entirely under ‘Income from Other Sources.’ However, certain exemptions apply:

• Gifts from Relatives (parents, siblings, spouse, children, etc.) are tax-free.
• Gifts Received on Marriage are exempt from tax.
• Gifts Through a Will or Inheritance are not taxable.
• Gifts from Charitable Institutions or Local Authorities may be exempt under specific conditions.
• Gifts for Medical or Educational Purposes may be tax-free in certain cases.

Case Study: Supreme Court’s Stance on Gift Deeds

In a notable judgment, the Supreme Court of India emphasized the protection of senior citizens’ interests. The court ruled that if children, after receiving property through a gift deed, fail to care for their elderly parents, the deed can be revoked under the Maintenance and Welfare of Parents and Senior Citizens Act. This underscores the importance of ensuring that such transfers are made with genuine intent and respect for familial responsibilities.*

Conclusion

A gift deed is a powerful tool to transfer property or assets to your loved ones during your lifetime. It’s simple, and legal, and ensures your family’s financial security. At Lxme: Investment Platform, we believe in empowering women to take charge of their finances and make informed decisions.

If you’re considering a gift deed, start by consulting a legal expert to ensure everything is done correctly. And remember, your financial decisions today can shape your family’s future tomorrow.

Ready to take the next step? 

Visit Lxme for more resources on financial planning guidance tailored for women like you. Let’s build a secure future together!

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Further read:

Know Your Rights: 5 Important Women’s Rights in India

Best Investment Options for a Girl Child – Secure Her Future

How to Build a Strong Portfolio that Wows!