How to Make Gift Deed in Gujarat?

How to Make Gift Deed in Gujarat Front

An owner of the property can transfer the same in many ways like Will, Gift or Sale.

Among family and friends, the property is usually transferred by way of executing a Gift Deed. 

The process of Gift deed creation is generally the same in all the States of India. There are certain requirements which are specific to each state, e.g. the criteria for imposing Stamp duty varies from State to State. The difference is there in stamp duty, and registration charges as States can charge Stamp duty and registration fees as per their revenue requirement.

For Gift deed in favour of blood relations, most of the States charge nominal Stamp duty and registration fees. In some states, there is a complete waiver also.

The process of gift deed creation requires:

  • Drafting of gift deed on stamp paper- In the drafting of Gift deed, the value of stamp paper depends upon the value of the property to be gifted. The gift deed must mention that gift is being made voluntarily and without any consideration. The donor must be solvent.
  • Signature of donor and donee on the deed – signature of the donee on the deed signifies the acceptance of the gift by the done which is necessary to make the gift valid. Acceptance of gift must be made during the lifetime of the donor otherwise the gift is rendered invalid.
  • Attestation by witnesses
  • Payment of stamp duty and registration charges

Under section 17 of the Registration Act 1908, registration of a Gift Deed is compulsory.  The stamp duty and the registration charges payable in each State are different and therefore, it is better to consult a local lawyer for making a gift deed.

Read: How Does Religious Conversion Affect Property Rights?

Moveable property can be gifted without any deed. Delivery and acceptance of the moveable property complete the gift transaction.

In the State of Gujarat:

  • Stamp duty payable is governed by the Bombay Stamp Act, 1958 as applicable to the State of Gujarat.
  • Stamp duty payable is 3.5 % of the market value of the property being gifted.
  • Surcharge @ 1% is also applicable over the stamp duty basic rate
  • Registration charges are paid in addition to the stamp duty.

Stamp duty payable depends upon the value of the property to be gifted. Valuation of property should be carried out by experts in the field to calculate the correct stamp duty.

In the state of Gujarat:

  • Draft models of gift deed are present on the official website, in English as well as the Gujarati language.
  • Property can be registered online also.
  • There is a provision for e-payment of Stamp duty and registration charges.

Since the registration of the deed of immovable property is mandatory, unregistered deed is not recognised in law. Therefore, it is advisable to register it as per the prevalent State Laws. In case, the gift deed of immovable property is not registered, the title does not pass to the donee. For Registration, the Gift deed is presented to the office of the local Sub -Registrar within whose territorial jurisdiction, the property or a portion of the property to be gifted lies.

Important points: In the State of Gujarat –

  • There is a penalty of 200% of the value of the gift deed executed, for evading stamp duty.
  • After GST, there is no impact on stamp duty and registration fees.

Tax implications on a gifted property

Gifting a property is a kind gesture, and it is better to be aware of tax implications for gifting a property.

We had a case where Mr Bhushan, an NRI was gifted with land situated in India by his father, a resident Indian. He wanted to know:

  • If a land in India can be gifted by his father who is a resident Indian
  • The legal requirements to complete this gift transaction
  • Tax implications

Our advice and guidance – Parties to a gift deed:

  • Donor (giver)
  • Donne (recipient)

Donor or Donne can be a Resident Indian or an NRI or a PIO.

Which property can be gifted: Any movable or immovable property like –

  • Land /Building
  • House
  • Jewellery
  • Shares and Securities
  • Paintings, Drawings, Sculptures – Any other work of art
  • Archaeological Collections

Agricultural Land, Farmhouse and Plantation Property in India cannot be gifted to NRI.

Legal Requirements for gift deed:

A gift is a voluntary transfer of movable or immovable property without consideration, by a donor to donne which is accepted by the donne during the lifetime of the donor. For a gift deed, we require:

  • Donor – voluntary transfer
  • Donne – acceptance of a gift
  • Property to be gifted in existence
  • Gift deed preparation
  • Registration of gift deed

Tax Implications:

Both Donor and Donne are charged with the payment of tax as per Income Tax Act, 1961, under certain conditions mentioned as below. Tax is levied in the year in which the gift is received.

Tax Implications

  • Any rent received by the Donor on a gifted property is added to his income for tax purposes.
  • For calculating Fair Market Value and Stamp Duty Value, it is better to take advice from a tax consultant

Exemptions from tax in case of Gift:

  • If the aggregate value of the gift is less than Rs 50,000
  • Gift received from the relatives (list of relatives provided in the Income Tax Act) – No tax irrespective of the value of the gift. In the case of Hindu Undivided family, all members are relatives.
  • On Marriage of the recipient
  • Gift received by will or inheritance
  • From local authority
  • From Charitable Trust/Find/Institution as per the provisions of the Act