A gift deed is a legal document that governs the transfer of gifts in India. It is the most common way of transferring gifts in India. Gifts can be transferred between family members, relatives, or even friends. It creates a legally binding transfer of ownership from donor to donee. Once the deed is executed, one becomes the legal owner of the property and then the donor has no right over the donated property. A registered gift deed has wattage in the court of law.
What is a Gift Deed in India?
Gift deeds as the name itself suggests is related to gifts. Gifts are something which has been given from one person to another without any consideration in return. Gifts can be any type of asset like property, car, accessories, etc. The legal document through which these gifts have been transferred from one person to another is called a gift deed in India. Transfer of Property Act, of 1882 is the governing law when we talk about gift deeds in India. Giving any gift is a voluntary act and it cannot be done forcefully. A gift deed is a proof of gifting and it is a legal process. As it is a legal process one cannot do it formally. There are a number of things that one must know about it and the current blog will help you out regarding the same.
Can a Minor Become Part of a Gift Deed?
There are a minimum of two parties in a gift deed in India, one is known as a donor and the other one is done. Donors refer to anybody who is transferring any asset in the form of a gift. On the other hand, the donee is the one who is receiving the gift from the donor. A donor must be capable of giving informed permission and in good mental health. A person who is able to enter into a contract can be a donor. A minor cannot become a donor. When we talk about donee, he or she is a person who is receiving the gifts. If a donee is a minor, gifts need to be approved by his or her guardian. In case the gift that was given to the minor is a conditional gift, he or she has the right to either accept it or not once he or she attends adulthood. There are many such things one must know about gift deeds which are given in the current blog.
Requirements of Gift Deed
The following are the requirements of a gift deed in India:
- There must be a minimum of two parties, donor and donee
- Donor cannot be a minor person; hence he must have attended the age of adulthood.
- Donor must be eligible to enter into a lawful contract
- Donor must have free consent and a sound mind
- There must not be any kind of coercion or undue influence
- Two witnesses are also needed
- Signature of the witnesses on the gift deed
- Signature of the donor and donee on the gift deed
How can a Gift Deed be Registered?
Registration of a gift deed is a process that gives legal recognition to the document. A registered deed can be administered in a court of law. It can be registered with the registrar’s office. Follow the steps given below to register a gift deed in India:
- Collect all the documents required for a gift deed
- Draft a gift deed with the help of a professional
- Take out a print of the drafted gift deed
- Take the signature of the donor and donee
- Take the signatures of the witnesses
- Reach out registrar’s office
- Pay the requisite Stamp Duty
- Verification of deed will be done
- In the end your document will be registered
Documents Required for Gift Deed
The very first step of the registration process for a gift deed is to collect all the requisite documents. Without proper documents, a gift deed in India cannot be registered. Following is the list of basic documents required for the registration of gift deed in India:
- Identification proof of both donor and donee
- Address proof of both donor and donee
- Photograph of both donor and donee
- Identification proof of witnesses
- Ownership documents of the gift
Key Clauses of a Gift Deed
In a gift deed, there are many clauses related to various things that govern the transfer of any kind of gift. Some of the important clauses are given below:
Consideration Clause
A gift_deed must be made voluntarily by the donor without any compulsion or pressure. There must be no payment or exchange of value in exchange for the gift, which means it must be given without any consideration. The gift must be given sincerely, with love, or with affection. The gift is not given with the profit motive. Transfer of property with consideration will not be governed by the gift_deed in India. It will automatically fall under the category of sale and will be governed by the sale deed.
Ownership Clause
The gift_deed must clearly specify the details of the property or assets being gifted, including its description, location, and boundaries. It must also contain a clear statement that the donor is transferring the ownership of the property to the donee as a gift. It should also mention any conditions, restrictions, or reservations, if any, attached to the gift.
Acceptance Clause
The gift deed must also clearly state that the donee has accepted the gift, and the acceptance must be mentioned in the presence of witnesses. During the lifetime of the donor, the recipient must accept the gift. The gift will be deemed invalid if the donee declines it. Hence it can be said that while giving and accepting any kind of gift consent of donor and donee respectively is equally important.
Stamp Duty Clause
The amount, date, and method of payment for the stamp duty that was paid on it should all be mentioned in this section. Along with mentioning that it has been registered, it should also include the registration date and number. In this clause related to stamp duty, it should also be mentioned, who is going to pay stamp duty. It should be either doner or donee or both together. If both are going to pay stamp duty, then the ratio in which they are going to pay must be mentioned. Stamp duty can vary from state to state. It is not similar everywhere.
Conclusion
Gift Deed in India is a legal document that governs the transfer of ownership from donor to do. A registered gift deed to acceptable in a court of law as a legal document, hence one must register a transfer of the gift. It can save during the time a dispute arises between the donor and the donee. A gift cannot be asked back once the ownership of the gift is transferred from the donor to the donee. Up to a certain limit gifts are tax-free. But above the particular limit, tax will be levied under the Income Tax Act. As there is a number of formalities included while taking gift_deed registration it is suggested to take the assistance of professionals.
