ALL YOU NEED TO KNOW ABOUT "GIFT DEED"

-

 

GIFT DEED

All human beings like to gift something to their relatives and loved ones in the family or even outside of family. Although gifting is common, but few of us understand the legal implications of gifting process and procedure involved in doing so. Ideal way of gifting is through execution of proper gift deed and this process scores above drafting “WILL” in some respect.

WHAT IS GIFT DEED

A Gift Deed is a legal document that describes voluntary transfer of gift from the DONOR (owner of property) to DONEE (receiver of gift) without any exchange of money. The DONOR must be solvent and should not use this tool for tax evasion and illegal gains, of whatsoever nature.

WHAT CAN BE GIFTED

Anything which qualifies as Gift must have following properties

A.   It must be well defined existing moveable or immovable property

B.   It must be transferable

C.   It should exist today and should not be future property

D.   It should be tangible

STEPS IN GIFTING PROCESS & PROCEDURE

Gifting process & procedure can be divided into three parts as follows:

STEP 1 (Drafting the Gift Deed)

A Gift Deed can be drafted with the help of a Lawyer / Expert Deed Writer and or person expert in drafting of documents, and it describes what is being transferred and to whom. Gift Deed is a contract between DONOR and the DONEE which defines simultaneously and reciprocal act of giving and taking, without involvement of any kind of monetary consideration. A gift to be valid must be made by a person voluntary and not under any kind of pressure or compulsion.  

STEP 2 (Acceptance of Gift by the DONEE)

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 DONEE fails to accept the Gift, it is rendered invalid. The acceptance must be validated by acts such as taking over physical possession of the property. 

STEP 3 (Registration of the Gift Deed)

As per Section 123 of the Transfer of the Property Act, a Gift of immovable property cannot pass any title to the DONEE unless it is registered, the entire process of execution and registration of the Gift Deed is required to be witnessed by two witnesses (during & post registration), and the DONEE can get the title transferred in its favour on the basis of the registered Gift Deed.

Registration of the Gift Deed is done as per provisions of the Registration Act, 1908.

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

b.    Payment of Stamp Duty and Transfer Duty varies from women and men (slightly lower for women), Stamp Duty also varies from state to state and for latest rates one should visit official State Govt. website.

IN CASE OF MINOR

Any persons who owns a property, can gift his/her property to anyone. An exception to this rule is the case in which either of the DONOR or DONEE is a minor, so Minors are not eligible to contract, hence 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 behalf of the Minor. And 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 adult, he/she must either accept the burden or return the Gift.

PROS & CONS OF GIFT DEED OVER WILL   

PROS

1.    It is executed during the life time of DONOR and transfer of title of the property happens immediately, and whereas WILL is applicable after death.

2.    Gift Deed needs to be registered; only then it is effective. Registration renders it less liable to get into litigation, and whereas WILL on other hand is prone to litigation.

3.    Transfer through Gift Deed are tax free in the hands of the DONOR and DONEE.

CONS

1.    Gift Deed is irrevocable post execution but WILL can be changed as many as times as you desire.

2.    There is extra cost involved in the form of Stamp Duty and Transfer Fees in case of Gift Deed, which varies from State to State, and whereas a WILL can be executed on a plain paper in the presence of two witnesses, although you can also get the WILL registered in the office of the concerned Sub-Registrar, and that too at a lower cost.

Comments

Post a Comment

Popular posts from this blog

Introduction

-
  Dear all Hope you are doing well!! It’s my pleasure to introduce myself. I am Vinod Arora, aged 62, and I am from Delhi / NCR. I am actively involved in Realty Segment since 1986, and presently I am working as Legal Head with a renowned Realty Group, based in South Delhi. Now as the name of my Blog reflects “Documents By Vinod Arora” I am expert in the field of drafting documents for the sale and purchase of properties in and around Delhi / NCR, although I am not a Law Graduate, but with the experience of more than thirty years in the Realty Segment, I have attained this specialty, and for this I want to thank my Mentor & Guru LATE SH. RAMJI DASS CHHABRA, who was one of the renowned Real Estate Consultants in South Delhi, since 70’s and was the sole owner of RAMJI FLATSWALE,  was having his office in Greater Kailash-I, New Delhi-110048. So after attaining this much of expertise and knowledge in the field of drafting documents for the Real Estate transactions,...
Read more

ALL ABOUT PROPERTY TAX IN DELHI (for areas under the jurisdiction of MCD)

-
  MUNICIPAL CORPORATION OF DELHI – MCD The Municipal Corporation of Delhi, (MCD), which has now been bifurcated into three different corporations as South Delhi Municipal Corporation (SDMC), East Delhi Municipal Corporation (EDMC), North Delhi Municipal Corporation (NDMC), and these are primarily responsible to revises the Property Tax Rates in Delhi every year. These rates are based on the location, age and usage type of the property. Property owners can pay tax on land and property to South Delhi Municipal Corporation (SDMC), East Delhi Municipal Corporation (EDMC), North Delhi Municipal Corporation (NDMC),    according to the zonal area which is further divided into different wards and colonies. Property Tax is the major source of revenue for any Municipal Corporation. This tax is paid by the property owners on all lands and buildings, including on the vacant land. In Delhi, the property tax is maintained by South Delhi Municipal Corporation (SDMC), East Delhi Muni...
Read more

ALL ABOUT "WILL"

-
  All about “WILL” Do you intend to make a WILL? If the answer is “yes”, then you must read this. Writing a WILL isn’t the most pleasant of tasks. After all, by doing do you are not only acknowledging your own inevitable demise but actively planning for it. But creating a WILL is the most critical things you can do for your loved ones. Putting your wishes on paper helps your heirs avoid unnecessary hassles, and you gain the peace of mind knowing that a life’s worth of possessions will end up in the right hands. What is a “WILL” A WILL is a legal declaration by the testator expressing his intention with respect to his property which he desires to be carried into effect after his death. The maker of the Will expresses his intentions about distribution of his property amongst his sons/daughters/relatives/friends when he is alive, but it will come into effect only after his death. The person who makes the WILL is called “Testator” and the person who inherits property under ...
Read more