Transfer Property by Gift Deed and Save Tax
There
are many ways of transferring property but when it comes to transferring to any
family member or friend, then most commonly gift deed is most commonly used as
no monetary transaction is involved. It is still necessary to register your
gift deed.
Once the gift deed is signed by the seller, the buyer has to accept it, till the time seller is alive. And once the buyer accepts the deed, the seller lost his right to revoke the deed thereafter.
Provision
Provision
of a gift deed is given under section 122 of the Transfer of Property Act,
1882. The deed contains all the details of the property like sale deed, along
with the details of the transferrer and recipient.
And the registration is mandatory under section 17 of the Registration Act, 1908 and also as per section 123 of the Transfer of Property Act. If registration is not done then the gift deed will be held invalid.
Gift deed is a transfer of any property (including the ancestral property) to any blood relation without any consideration. Otherwise the consideration is an important criteria for a valid contract, or the court can held the contract to be null an void, if the evidence of consideration is not shown.
Mutation
This is the most important step. The gift deed is not completed only by registering. There is yet another step to go, like sale deed of any property, i.e. mutation. In this process, the recipient has to go to the Tehsil Office of his city and show the Tehsildar his registered gift deed. It is only thereafter that the property is transferred by the authorities in their land and revenue record in your name. It is the duty of the recipient to do mutation.
Difference
between sale deed and gift deed
Both
are deed that will allow one to transfer property but it is the gift deed that
will provide you with the option of paying considerably less stamp duty fees if
the property is transferred to your immediate family or lineal descendants. The
laws governing the gift deed are subjective to the state regulations
though.
In gift deed, there is no consideration taken from the buyer. Whereas in the sale deed buyer is legally bound to pay consideration in return, otherwise the contract would be held invalid.
Conditions
for gift deed
The person can only transfer the self-acquired property by means of gift deed and not the joint family property. Self-acquired means the property which does not have multiple owners (not a joint family property).
Is it only between blood relation?
No, there is no such restriction for the gift deed. Anyone can transfer the property through a gift deed. But it is recommended only between the family and friends.
Can
Muslims too sell the immovable property by gift deed?
Yes,
any religion can use this method to sell the property. Muslims can sell
immovable property under the Transfer of Property Act.
As
per the Supreme Court ruling, the Muslims can sell the property by gift deed
even if it is not registered under the Transfer of Property Act or Stamps and
Registration Act.
A bench of justices R M Lodha and S S Nijjar in a judgement quashed a ruling of the Andhra Pradesh High Court that the property gifted by late Shaik Dawood to one of his sons Mohammed Yakub was not valid as it was not registered under the law. Section 17 (1) (a) of the Registration Act is not applicable to Muslims in the light of at the Muhammadan Law and section 129 of the Transfer of Property Act.
Can joint property be gifted?
Yes, the property which is having more than 1 owner, can be transferred through gift deed. The gift deed has to be signed by all the co-owners of the property (in case the property is not divided among owners) in the name of donee. The deed has to be duly signed and registered.
Importance of 2 witnesses to sign the deed
The witnesses are the person which ascertains the fact that the deed is not signed under any undue influence or coercion. Whereas the sign of the registrar is the proof that the deed is duly registered under a licensed registrar as per the law.
What
all gift deed is taxable?
The
charges charged are normally 4% for men and 6% for women. And the stamp duty is
around 5% of the property value in the panchayat area and 6% in the municipal
area.
But if the recipient is a family member then the stamp duty is 0.5%. very less in comparison to sale deed (which could vary from 5% to 10% of the property value, in different states).
Who all come under the ambit of relative for a Gift Deed (for purpose of receiving the gift):-
| Father | Grand Father |
| Mother | Grand Mother |
| Brother | Great Grand Father |
| Sister | Great Grand Mother |
| Son | Daughter’s Husband |
| Daughter | Son’s Wife |
| Grand Son | Wife’s Father |
| Grand Daughter | Wife’s Mother |
| Husband | Husband’s Father |
| Wife | Husband’s Mother |
| Sister’s Husband | Wife’s Grand Father |
| Brother’s Wife | Husband’s Grand Mother |
| Wife’s Brother | Husband’s Grand Father |
| Wife’s Sister | Wife’s Grand Mother |
| Husband’s Brother | Wife’s Great Grand Father |
| Husband’s Sister | Husband’s Great Grand Mother |
| Mother’s Brother | Husband’s Great Grand Father |
| Mother’s Sister | Wife’s Great Grand Mother |
| Mother’s Sister Husband | Brother’s Wife |
| Wife’s brother’s wife | Mother’s Brother’s Wife |
| Father’s Brother | Husband’s Brother’s Wife |
| Father’s Brother’s Wife | |
| Father’s Sister’s Husband | |
| Father’s Sister |
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