Gift of property is made without any monetary consideration. It is generally made to relatives out of love and affection. It is a transfer of ownership in property from one person to another.
In the recent past, during an interaction with a native from Punjab who was settled in the UK, we realised the complexities that arise while an individual wants to give estate to a child.
Confused by various incomplete sources of information and anxious about the exact legalities involved, he was keen to know the precise legal requirements for this document.
Our lawyers felt we needed to spell out these pointers for other such people too. The same are discussed below:
Meaning of Gift deed:
It is a legal document describing the transfer of property from the donor to the donee without any exchange of money. The donee becomes the absolute owner of the gifted estate. In case of onerous gifts, obligations are also transferred.
What can be gifted:
- Moveable or immovable property
- Tangible property
- Existing Property
Parties in a deed:
- Donor (the one who transfer property)
- Donee (one who is the recipient)
Any person who is competent to contract can be a donor. A minor cannot make a gift of his estate.
The process of Creation of Gift Deed:
Act of Gifting: The Donor must intend to make it voluntarily out of his free will without any monetary consideration.
The donor must be:
competent to make a contract, i.e. gift deed (minor cannot be a donor)
aware of his act and its implications
Acceptance: Donee must accept it during the lifetime of the donor and while the donor is still capable of making a gift.
Acceptance is shown by various acts like taking possession of property or taking possession of the deed. Possession can be actual or constructive. Mere silence also amounts to acceptance where silence signifies assent. A gift without acceptance is not complete.
Registration: Deed for transfer of immovable property has to be registered compulsorily otherwise the transfer of ownership is invalid. It has to be signed by both the parties and attested by witnesses.
Registration fee and Stamp duty have to be paid as per the applicable rates in a particular State.
Moveable estate can be gifted without any deed, but delivery and acceptance are necessary for completing the transaction.
- It must mention the details of the donor and donee.
- Property to be gifted must be described clearly
- It cannot be revoked unless there is a clause of revocation in the deed itself.
As a special context, we are listing out some considerations for the state of Punjab, since some recent clients were natives of this state.
Process of registration in Punjab
The basic procedure of registration of this deed is the same in every State.
- Preparing the Deed
- Signing by Donor and Donee
- Attestation by witnesses
- Registration at Registrar’s office
State fixes stamp duty. It is different in different States.
The range of applicable stamp duty in Punjab is 0.5% to 6%. There will not be any application fee charged in case the property is transferred to any blood relative within the lifetime of the donor. The blood relatives include the mother, father, spouse, son, daughter, brother, sister, grandson and granddaughter.