In India, a gift deed is a commonly used legal document to transfer property from one person to another. It is a document that signifies the voluntary transfer of property ownership without any monetary exchange. This transfer of ownership is recognized
under the Indian Transfer of Property Act, of 1882.
A gift deed can be used for movable as well as immovable property. Immovable property includes any type of real estates, such as land, buildings, etc., while movable property includes items like jewelry, vehicles, shares, etc.
To execute a gift deed, the owner (also called the donor) of the property must be of sound mind and must be capable of making the gift. The recipient must also be capable of receiving the gift. The gift deed must be in writing and must clearly mention the donor’s intention to gift the property to the recipient. It must also include details such as the property’s location, description, and other necessary things which distinguish the property.
It is crucial to note that a gift deed cannot be executed for the future property. The donor must be the absolute owner of the property at the time of executing the gift deed. If the donor has any liabilities or mortgages on the property, these must be cleared before executing the gift deed.
The gift deed must be executed in the presence of two witnesses who must also sign the document. The witnesses must be of sound mind and must not be beneficiaries of the gift. The gift deed must also be stamped as per the provisions of the Indian Stamp Act, of 1899. The stamp duty is payable on the gift deed and is based on the value of the property being gifted.
The gift deed must be registered with the competent authority to hold legal validity, as an unregistered gift deed is not recognized by law. Once the gift deed is executed, it cannot be revoked unless there is a mutual agreement between the donor and the recipient. If the donor wishes to revoke the gift, they must prove that there was fraud or undue influence in the execution of the gift deed. If the recipient dies before accepting the gift, the gift deed becomes null and void.
One of the benefits of executing a gift deed is that it is a tax-efficient way of transferring property. Under the Income Tax Act, of 1961, any property received as a gift is not subject to income tax. However, if the value of the property received as a gift exceeds Rs. 50,000, the recipient must disclose it in their income tax returns.
In conclusion, a gift deed is a legally recognized way of transferring property from one individual to another without any monetary exchange. It is a useful method for transferring property ownership and has legal validity under the Indian Transfer of Property Act, of 1882. It is important to ensure that all the legal requirements for executing a gift deed are fulfilled to ensure that the transfer is valid.
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