What is Gift Deed?

When the gift involves immovable property, such as a house, flat or land, a registered Gift Deed is required. Movable property may be transferred through delivery or a registered instrument, depending on the asset. This guide explains how a Gift Deed works, the registration process, applicable stamp duty, tax treatment and the circumstances in which it may be revoked.

What is a Gift Deed?

A Gift Deed is a legal document used to voluntarily transfer an existing movable or immovable property from one person, known as the donor, to another person, known as the donee, without monetary consideration.

Unlike a Will, which takes effect after the testator’s death, a Gift Deed transfers ownership during the donor’s lifetime. The donee must accept the gift while the donor is alive and capable of making the transfer.

Key Features:

Under Section 123 of the Transfer of Property Act, 1882, a gift of immovable property must be made through a registered instrument signed by or on behalf of the donor and attested by at least two witnesses. A gift of movable property may be completed either through a registered instrument or by delivery.

Other requirements include:

• The transfer must be voluntary and without monetary consideration
• The property must exist when the gift is made
• The donee must accept the gift during the donor’s lifetime
• The donor must legally own the property or have the authority to transfer it

Properties Transferable Through a Gift Deed

1. A Gift Deed can be used for transferring:

• Immovable Properties: Land, houses, or apartments, excluding growing crops or timber.
• Movable Properties: Jewellery, vehicles, or cash.

2. Conditions for Valid Transfer:

• The donor must legally own the property or have the authority to transfer it
• The property must exist when the gift is made. A future property cannot be gifted
• The transfer must be voluntary and without consideration
• The donee must accept the gift during the donor’s lifetime
• Any mortgage, charge, dispute or other encumbrance affecting the property should be disclosed
• The applicable stamp-duty, registration and documentation requirements must be completed

Advantages of a Gift Deed

1. Legal Validity: Acts as legal proof during disputes.
2. Tax Treatment: A gift may be exempt or taxable in the donee’s hands depending on the relationship between the parties, the type and value of the property, and the circumstances in which it is received.
3. Immediate Effect: Transfers ownership instantly, unlike a 'Will.'
4. Limited Revocation: A completed gift generally cannot be cancelled merely because the donor changes their mind. Revocation is permitted only under limited legal grounds or a valid condition included in the deed.

How Is a Gift Deed Registered?

The following process generally applies when you gift immovable property:

1. Draft the deed: Include the donor and donee’s details, the property description, ownership details, acceptance of the gift and any valid conditions.

2. Calculate stamp duty: Pay stamp duty according to the law applicable in the state where the property is situated.

3. Execute the deed: The donor signs the deed, and at least two witnesses attest it.

4. Present it for registration: Submit the deed and supporting documents to the jurisdictional Sub-Registrar. The parties or their legally authorised representatives may need to appear according to the applicable registration procedure.

5. Collect the registered deed: Once registration is completed, collect the registered document and apply for mutation or updating of the relevant property records, where required.

What are the Documents Commonly Required for Gift Deed

The documentation required for a gift deed can differ based on factors such as state regulations, the type of property being transferred, and local registration requirements.

Below are some of the commonly used documents associated with gift deeds:

• Draft Gift Deed
• Identity and address proofs of the donor, donee and witnesses
• PAN details, where applicable
• Original ownership or title documents
• Property description and valuation details
• Proof of stamp-duty and registration-fee payment
• Encumbrance certificate, NOC or other approvals, where required

If you plan to use the gifted property while applying for a home loan, the lender may review the registered Gift Deed, previous title documents, mutation records and encumbrance details to verify the ownership and marketability of the property. The exact documents required will depend on the property and the lender’s verification process.

How Much Stamp Duty Applies to a Gift Deed?

Stamp duty and registration charges vary by state. The amount may depend on:

• The market or guideline value of the property
• The relationship between the donor and donee
• The property type
• The property’s location
• Any concession available to a particular category of donor or donee

Some states offer concessional rates for gifts between specified family members. However, the definition of an eligible family member and the property categories covered by the concession may differ between states.

Before registering the deed, check the latest rate on the relevant state registration department’s portal or confirm it with the jurisdictional Sub-Registrar.

What Are the Tax Implications of Receiving Property as a Gift?

For Tax Year 2026-27 onwards, the taxation of gifts is governed by Section 92 of the Income-tax Act, 2025.

Gifts From Specified Relatives

Money or property received from a relative covered by the Act is generally not taxable in your hands, irrespective of its value. The definition includes specified relationships such as your spouse, siblings, parents, lineal ascendants and descendants, and certain relatives of your spouse.

Gifts From Non-Relatives

If you receive money without consideration from non-relatives and its aggregate value exceeds ₹50,000 during the tax year, the entire amount may be taxable under “Income from Other Sources”. If you receive immovable property without consideration and its stamp-duty value exceeds ₹50,000, the stamp-duty value may be taxable in your hands. For specified movable property, tax may apply if its aggregate fair market value exceeds ₹50,000.

Gifts Received in Exempt Circumstances

The gift-tax provisions generally do not apply to money or property received:

• From a specified relative
• On the occasion of your marriage
• Under a Will or by way of inheritance
• In contemplation of the donor’s death
• From other persons or institutions covered by the statutory exemptions

The ₹50,000 amount is a threshold and not a general deduction. Once the applicable threshold is crossed, the taxable amount depends on the type of gift and the relevant provision. Stamp duty and income tax are separate. A gift may be exempt from income tax but still attract stamp duty and registration charges.

Important Rules to Remember

• The gift must be voluntary and without any monetary transaction.
• The donor must be legally competent to transfer the property. A minor may receive a non-onerous gift, with acceptance made on the minor’s behalf by a lawful guardian. Registration and representation requirements should be checked according to the applicable state procedure.
• Only existing properties can be gifted; future interests are not allowed.
• Registration ensures legal enforceability and protects against disputes.

Can a Gift Deed Be Revoked?

Once a gift has been validly executed, accepted and registered, the donor generally cannot cancel it merely because they have changed their mind.

Under Section 126 of the Transfer of Property Act, 1882, a gift may be suspended or revoked when:

• The donor and donee agreed to a valid condition under which the gift would be suspended or revoked after a specified event
• The event does not depend solely on the donor’s wishes
• The gift can be rescinded on grounds that would permit a contract to be rescinded, such as fraud, coercion, misrepresentation or undue influence

If the donee contests the cancellation, the donor may need to approach a competent court. A later mutual decision to reverse the transfer does not automatically cancel the registered Gift Deed. Depending on the circumstances and state rules, a registered reconveyance or another legal process may be required.

You should obtain legal advice before including a revocation, maintenance or life-interest condition in the deed.