What is a Gift Deed?

A gift deed is a legal instrument that records the voluntary transfer of property or assets of one individual (donor) to another (recipient or donee) without any consideration being paid. After understanding what is a gift deed, you should know that such transfers are the result of love, goodwill, charity, or similar intentions and are governed by the Transfer of Property Act, 1882. After the execution of the instrument, both parties become legally bound by the provisions of the deed. For a gift deed to have a legal backing, one of the gift deed rules to follow is its registration, which entails the payment of stamp duty and registration charges, acceptance of the gift by the donee, and the correct details of the parties and property. Registration makes the change formal and, thus, lessens the chances of disputes later on.

Though a gift deed is mostly a document for the transfer of immovable property, such as a house or land, it may be used in the case of movable property as well, for instance:

• jewellery

• Securities or shares

• Vehicles

• Art

• Money (within the legal limits)

Legal Validity

Registration imparts legal validity to the Gift Deed, making it a recognised and enforceable document in a court of law.

Prevention of Fraud

The registration process acts as a safeguard against fraudulent transactions, ensuring that the transfer of the conditional gift deed is genuine and meets legal standards.

Public Record

By becoming part of the public record, the registered Gift Deed contributes to transparency, preventing disputes regarding property ownership. It is equally important while learning more about what is a gift deed.

Enforceability

Only a registered Gift Deed is legally enforceable. In case of a dispute, a registered document holds more weight as evidence.

Property gift deed rules apply to various types when all the conditions are met, namely:

Immovable Assets:

This category covers real estate such as land, apartments, or houses. Usually, agricultural produce or forestry products are not included.

Movable Assets:

Things like money, cars, and jewellery, as well as similar items of personal property, may also be gifted with the help of a deed.

After the preparation, the deed has to be brought to the local sub-registrar for registration. This is a very significant step because:

It confers legal power:

Without registration of a gift deed, the donor remains the legal owner.

It safeguards the donor against fraudulent deeds:

Registration generates an official public record; thus, the risk of fraudulent claims is minimised.

It guarantees a clear title:

By registering and paying gift deed charges, a person's ownership is confirmed, which is very important in case of any future dealings with the property.

Knowing the steps before handing over the required gift deed registration charges makes it easier to have the process done smoothly. The most important stages refer to:

Composing the Gift Deed:

The deed should explicitly state the donor, donee, the property, the relationship between parties, and the affirmation that the transfer is voluntary and without consideration. Additionally, it is also important to know the gift deed registration charges for transparency.

Property Valuation:

Typically, the property assessment is made based on the local circle rate to establish the stamp duty to be paid, along with the gift deed charges.

Stamp Duty Payment:

The exact stamp duty varies by state and, generally, it is cheaper when the conditional gift deed is given to close family members.

Sub-Registrar Visit:

The donor, donee, and two witnesses have to be present physically in order to lodge the document for registration and pay the gift deed registration charges.

Signing and Confirming:

The deed is signed by all parties before the sub-registrar, an important point to note regarding property gift deed rules. After the confirmation, the deed is officially registered.

Registered Deed Collection:

The donee is given the final registered copy that confirms the transfer of the gift deed of property. Hence, understanding what is a gift deed of property is imperative.

To complete the registration without any hiccups, you need to understand the gift deed meaning and the following records may be necessary:

• Identity proofs of donor and donee: Aadhaar, PAN, passport, driving license

• Address proof: Utility bills, voter ID, ration card

• Property papers: Original sale deed, khata certificate/extract, encumbrance certificate

• Gift deed draft

• Witness ID proofs: Aadhaar or PAN Card

• Proof of stamp duty payment: Receipt or challan

• NOC from the respective authorities or housing society

Gifts from certain relatives, for instance, parents, children, siblings, or a spouse, are fully exempted, no matter their value, according to gift deed rules. When a non-relative gives a gift of a value exceeding ₹50,000, the amount in excess is charged under "Income from Other Sources" under The Income Tax Act, 1961. Stamp duty and registration charges for gift deed are usually paid by the donor unless the parties mutually decide otherwise, and these costs are different from state to state.

Legally dependable:

A registered deed is a powerful legal instrument that certifies ownership and thus, the possibility of legal disputes is lowered with a conditional gift deed.

No money involved:

Gifts may be given simply out of love, without any exchange of money or signing sales agreements.

Immediate transfer:

Gift deed meaning is essential, but the transfer of ownership is also a crucial part. The ownership is handed over to the donee right after registration, unlike wills, which become effective only after the testator's demise.

Full rights to the donee:

Normally, a registered gift deed cannot be revoked, thus, the recipient is assured of full ownership unless there are specific clauses about revocation.

Assistance in succession planning:

Such a situation enables people to distribute their assets while they are still alive, and thus, the problem of the heirs quarrelling will be solved.

Though in most cases registering a gift deed marks the end of the road, there is still an option for revocation if:

• Donor and donee decide together to revoke the gift

• Reasons for revocation are explicitly stated in the deed

• The revocation takes place and is registered in the same way as the original gift

• The gift being revoked is the result of fraud, coercion or undue influence

If the donee fails to fulfil the conditions in the deed, the donor of the conditional gift deed may be allowed to revoke it.

By inserting all necessary information in the deed, having the documents ready and going through the insertion process (including payment of the applicable charges), both donor and donee will be the winners and can understand the gift deed meaning easily. Correct registration and paying the gift deed registration charges acts as a safeguard for the donor and the donee against disagreements in the future, and, in case the gifted property has to be involved in the next legal or financial transactions, it gives a strong foundation.