GIFT DEED
Gift Deed: Understanding a Gift Deed
A gift deed is like a beautiful promise, where one person (the “Donor”) gives ownership of their property to another person (the “Donee”) without expecting anything in return. It’s an act of generosity, made official through a registered gift deed, which makes the gift binding and legally recognized. Without this official document, the gift doesn’t hold any legal value.
A Deed of Gift could still be set aside on any of the following grounds: – (i) cases where the Gift was given by fraudulent means; (ii) Gifts are given under misrepresentation or mistake of the surrounding circumstances regarding the Gift; (iii) Gifts are transferred to defraud Creditors or evade Tax; (iv) cases where the Donor lacks the legal capacity to make the Gift.
Different Types of Gifts: More Than Just Presents
There are different kinds of gifts, and each one comes with its own set of rules. A registered gift deed is typically used when giving a gift during someone’s lifetime. This is called an “Inter Vivos” gift. If the gift is given in anticipation of death, it’s known as a “Gift Mortis Causa.” And, sometimes, gifts are given through a Will, which is known as a “Testamentary Gift.” In each case, the gift deed ensures that the transfer of property is legally documented.
When is a gift complete?
Immovable Property
Immovable Property
Gift of immovable property is complete only when the transfer is effected by a registered gift deed and stamped instrument signed by the donor and attested by at least two witnesses.
Movable Property
The gift of movable property is complete when it is effected either by a registered gift deed signed as aforesaid or by delivery. The donee has to accept the gift either by confirming acceptance in writing or by taking delivery. If the donor revokes the gift before acceptance by donee, then it’s no longer a gift.
Are gifts taxed in India?
Good news—there’s no tax on gifts in India! This means the person giving the gift doesn’t have to pay taxes when giving it. However, if the recipient receives a large sum (over ₹50,000) without giving anything in return, the total value may be taxed as income. But don’t worry—gifts received from family members or through a formal transfer made in the giver’s final days are usually exempt from this tax.
Additionally, transfers that are made through a formal deed, particularly those given during the giver’s final days, are typically excluded from the tax net. This makes it easier for families to pass on assets without the burden of taxation.