A gift deed, as per Section 122 of the Transfer of Property Act, 1882, is a legally binding document allowing the donor to voluntarily transfer existing movable or immovable property to a donee. A gift deed is valid only when given without any consideration, typically to a family member or friend. Under Section 17 of the Registration Act, 1908, transferring immovable property requires a registered gift deed.
Clauses in an Online Gift Deed Registration
Contributor and Donee Proof: Must mention names, addresses, and relationship. Must state transfer is out of love and affection, without monetary exchange.
Voluntary Transfer: Donor must be acting voluntarily, without coercion.
Proprietor of Property: Donor must be rightful owner of the property.
Property Specifications: Accurate description of the property.
Rights of the Donee: Rights like selling, leasing, or mortgaging after acceptance.
Acceptance by Donee: Donee must willingly accept the property.
Delivery: Ownership transfer must be indicated at execution.
Witnesses: At least two witnesses required with names and addresses.
Revocation: Not mandatory unless agreed upon explicitly.
Tax Implications of Gift Deed Registration
Gifts given after 1 April 2017 are taxable under Section 56(2)(x) of the Income Tax Act, 1961. If a person receives a gift exceeding ₹50,000, it is taxable as ‘Income from Other Sources’.
Exemptions – Gifts Not Taxable
From a relative
On marriage of the donee
Under will or inheritance
In contemplation of death
From local authority or registered trust/fund
From educational/medical institutions
From trusts under Section 12A/12AA
Income Tax on Gift Deed
Gift deeds must be declared in ITR. If the stamp duty value exceeds ₹50,000 and the consideration is inadequate, the difference is taxable.
Example: If you receive a property worth ₹4 lakhs for ₹1.5 lakhs, ₹2.5 lakhs is taxable.