All human beings like to gift something to their relatives and loved ones. Although gifting is common, only a few of us understand the legal implications of the gifting process.

What is Gift Deed?

A gift deed is a document that records the act of giving a gift and is executed between the donor (the person giving the gift) and the donee (person receiving the gift). Though it is not compulsory to execute a gift deed while gifting any asset, it does create a valid documentary record.

What can be gifted?

Anything which qualifies as a gift must have the following properties

1. It must be well defined as existing movable or immovable property

2. It must be transferable

3. It should exist today and should not be a future property

4. It should be tangible.

Gifting Process:

Step 1: Drafting the Gift Deed

A gift deed must be drafted with the help of legal professionals and it describes what is being transferred and to whom. Gift Deed is a contract between donor and the donee which defines simultaneous and reciprocal act of giving and taking. A gift to be valid must be made by a person voluntarily and not under compulsion without any exchange of money.

Step 2: Acceptance

Acceptance of the gift after its execution is a legal requirement and Donee must accept the gift during the lifetime of the donor. In case the donee fails to accept the gift, it is rendered invalid. The acceptance may be validated by acts such as taking possession of the property.

Step 3: Registration

As per Section 123 of the Transfer of Property Act, a gift of immovable property cannot pass any title to the donee unless it is registered. Attestation by two witnesses is required during registration and post-registration, title transfer is possible.

How to register a Gift Deed?

Registration of gift deed is done as per the provisions of the Registration Act, 1908. Common steps involved in the registration process are:

1. Valuation of the property being gifted by an approved valuation expert.

2. Payment of Stamp duty and transfer duty – Stamp duty varies for women and men (Slightly lower for women). Stamp duty also varies from state to state and for the latest rates one should visit the official state government website.

Provisions for Minor

Legally speaking person who owns the property can make a gift to any other person. An exception to this rule is the case in which either of the donor or donee is a minor. Minors are not eligible to contract; therefore they cannot transfer property as a gift. A gift deed in case of donor being a minor is legally not valid. In case of donee being a minor, a natural guardian can accept a gift on his behalf. Guardian acts as a manager of the gifted property, and if the gift is onerous, the obligation cannot be enforced on donee until he/she is a minor. Once the donee is an adult, he must either accept the burden or return the gift.

Pros and Cons of Gift deed over Will

Pros

1. It is executed during the lifetime of donor and transfer happens immediately whereas “Will” is applicable after death.

2. Gift deed needs to be registered; only then it is effective. Registration renders it less liable to litigation. “Will” on the other hand is prone to litigation.

3. Transfer using gift deeds are tax-free in the hands of donor and donee.

Cons

1. A gift deed is irrevocable post-execution but “Will” can be changed as many times as you want.

2. There is an extra cost in the form of Stamp Duty in the case of Gift Deeds. Stamp duty varies from state to state.

FAQs

1. Who can gift property?

Ans: Any valid owner of an existing property can gift property. A minor is incompetent to gift a property though a guardian can accept such a gift on his behalf.

2.WHAT is the law that governs gifts by one person to another?

Ans: Transfer of Property Act, 1882.

3. What may be transferred?

Ans: Property of any kind may be transferred, movable or immovable.

4. Can there be an oral transfer?

Ans: A transfer of property may be made without writing if it is not expressly required by law. Gifts under the Islamic law may be made orally, as it does not require registration.

5. What is a gift?

Ans: It is a transfer of existing movable or immovable property made voluntarily without consideration by one person to another.

6. What are the ingredients of gift?

Ans: Gift is made by one person called the donor to another called the donee. There should not be any consideration for making a gift. That is, the donor should not receive consideration of any kind while making a gift. The donee should accept the gift in the lifetime of the donor.

7. How the gift of immovable property is made?

Ans: Under the Indian Registration Act, any transfer of any immovable property, if the value of the property is more than Rs 100, should be in writing and should be registered.

8. What are the formalities for registering a gift deed?

Ans: The donor on requisite stamp paper should sign the deed. It should be attested by at least two witnesses; the donee should accept the gift.

9. What is meant by attested?

Ans: Attestation of an instrument (document) means that witnesses who sign the instrument should have seen the donor signing the gift deed and they should sign as witnesses in the presence of the donor and in the presence of each other.

10. Does the gift of movable property require registration?

Ans: Gift of movable property, may or may not be registered. But the delivery of the property and acceptance of it are essential.

11. How to effect delivery of the property?

Ans: The same way as goods is delivered in the sale of goods.

12. What is the effect of a gift comprising both existing and future property?

Ans: A gift comprising both existing and future property is void.

13. Can gift be made to several persons and if one does not accept it, what happens?

Ans: A gift to two or more persons (donees) and one of them does not accept it, it is void so far he is concerned.

14. Can gift once made be suspended or revoked?

Ans: The donor and donee may agree that on the happening of a specified event, which does not depend upon the will of the donor, a gift shall be suspended or revoked.

15. What is a gift deed?

Ans: A gift deed is an agreement used when a person wishes to gift his asset (property or money) to someone. It is the transfer of certain existing (not future) moveable or immoveable property made voluntarily and without any consideration from one person (called ‘donor’) to another (called ‘donee’).

16. Who can gift property?

Ans: Any valid owner of an existing property can gift property. A minor is incompetent to gift a property though a guardian can accept such a gift on his behalf.

17. Why should I require a gift deed?

Ans: As per law, the title in a property cannot be delivered without a written instrument even when its value is small. Therefore, such deed is important to obtain and execute.

18. What is the procedure to use such a deed?

Ans: The draft of such a deed can be directly printed as per the instruction kit provided and can be successfully executed by obtaining the signatures of the donor, donee, and witnesses.

19. Is acceptance by the donee mandatory?

Ans: Yes, the acceptance of the gift is mandatory

20. Is registration of a gift deed mandatory?

Ans: As per section 123 of the Transfer of Property Act, the transfer of a gift of immovable property must be effected by a registered instrument signed by the donor and attested by two witnesses. For moveable property such as a car, such a registration is not mandatory and transfer can be achieved by delivery.

Sample format of Gift Deed:

GIFT DEED
This deed of Gift is executed on ________ day of ______________ month of _____________ year by Sri./Smt.__________________________, S/o./ W/o.____________________________, occupation____________________, and aged __________ years, residing at_________________________________________________________________ _________________________________________________________________. herein after called the DONOR.
In favour of Sri./Smt.__________________________S/o./W/o._________________________, occupation____________________, aged __________ years, residing at_________________________________________________________________ _________________________________________________________________ Herein referred to as the DONEE.
Whereas, the term Donor and Donee unless repugnant to the context shall mean and include their representatives heirs, successors, executors, administrators, trustees, legal representatives and assigns.
Whereas, the Donor herein, is the sole and absolute owner of immovable property 3 bearing No.___________ known as _____________________ situated at more fully described in the schedule hereunder written and hereinafter called the schedule property. Whereas, the Donor is the absolute owner, having acquired the property, by ____________________ 4 and since then Donor has been in possession and enjoyment of the schedule property and paying taxes and levies thereon, as sole and absolute owner thereof.
Whereas the Donee is related to the Donor as ____________.*
Whereas the Donor desires to grant the said land and premises more fully described in the schedule written hereunder and hereinafter referred as scheduled property to the Donee as a gift in consideration of natural love and affection subject to the condition hereinafter mentioned.
NOW THIS DEED WITNESSETH that the Donor, without any monitory consideration and in consideration natural love and affection which the Donor bears to the Donee hereby grant and transfer by way of gift, the scheduled property situated at ________________ together with all the things permanently attached thereto or standing thereon and all the liberties, privileges, easements and advantages appurtenant thereto and all the estates, rights, title, interest, use, inheritance, possession, benefits, claims and demand whatsoever of the Donor TO HAVE AND TO HOLD the same unto the use of the Donee absolutely but subject to the payment of all taxes, rates, assessments, dues and duties now and hereafter chargeable thereon to the Government or local authorities.

Whereas the Donor hereby covenant with the Donee:

(a) That the Donor now has in himself, an absolute right, full power, and absolute authority to grant the said scheduled property hereby granted as a gift in the manner aforesaid.

(b) The Donee may at all times hereinafter peacefully and quietly enter upon, take possession of the scheduled property and enjoy the said scheduled property as he deems fit without any interruption, claim or demand whatsoever from or by the Donor or his heirs, executors, administrators and assigns or any person or persons lawfully claiming or to claim by from under or in trust for the Donor.

(c) AND FURTHER that the Donor and all persons having or lawfully claiming any estate or interest whatsoever to the said scheduled property and premises or any part thereof from under or in trust for the Donor or his heirs, executors, administrators and assigns or any of them shall and will from time to time and at all times hereafter at the request and cost of the Donee do and execute or cause to be done and executed all such further and other acts, deeds, things, conveyances, and assurances in law whatsoever for better and more perfectly assuring the said scheduled property and every part thereof unto and to the use of the Donee in the manner aforesaid as by the Donee his heirs, executors, administrators and assigns or counsel in law shall be reasonably required.