Table of Contents
- What is a Gift Deed?
- Essential Components of a Gift Deed:
- Stamp Duty on Gift Deeds in 2025
- Tax Implications of Gift Deeds in 2025
- Taxable Gifts
- Properties That Can Be Given As Gifts
- Steps to Register a Gift Deed in 2025
- How is the stamp duty rate on Gift Deed Calculated?
- Payment of Stamp Duty: Who Pays?
- Legal Requirements For A Gift Deed
- Advantages of Gift Deed
- Key Considerations for Gift Deeds in 2025
- Conclusion
- Faq's
What is a Gift Deed?
A Gift Deed is a legal document that facilitates the transfer of ownership of property or assets from one individual to another as a gift, without any monetary exchange involved. This written instrument formalizes the voluntary transfer of property rights, where the giver, known as the "donor," transfers the asset to the recipient, referred to as the "donee," without expecting anything in return. Gift Deeds are commonly used for gifting real estate, cash, or other valuable assets, and they play a crucial role in estate planning by allowing individuals to pass on assets to their loved ones during their lifetime. The process of creating a Gift Deed involves drafting the document with relevant details, stamping and registering it as per state laws, delivering possession of the property, and executing the deed in the presence of witnesses to make the transfer legally binding.
Also Read: Property transfers through gift deeds
Essential Components of a Gift Deed:
Gift Deed is a legal document that facilitates the transfer of ownership of property or assets from one individual to another as a gift
When drafting a gift deed, certain essential components must be included:
- Details of the donor and donee
- Description of the property being gifted
- Relationship between the donor and donee
- Clauses regarding liabilities, rights, and possession
- Delivery clause indicating the transfer of possession
Stamp Duty on Gift Deeds in 2025
|
State |
Stamp Duty for Blood Relatives |
Stamp Duty for Others |
|
Maharashtra |
₹200 for residential or agricultural property gifted to family members |
3% of the property's market value |
|
Karnataka |
₹1,000 for property gifted to family members |
5% of the property's market value |
|
Delhi |
4% of the property's market value for women; 6% for men |
4% of the property's market value for women; 6% for men |
|
Uttar Pradesh |
₹5,000 for property exchange among blood relatives plus ₹1,000 processing fee |
5% of the property's market value |
|
Tamil Nadu |
1% of the property's market value (subject to a maximum of ₹25,000) |
7% of the property's market value |
|
West Bengal |
₹1,000 if gifted to a family member |
5% of the property's market value |
|
Telangana |
₹1,000 if gifted to family members |
4% of the property's market value |
Tax Implications of Gift Deeds in 2025
Under the Income Tax Act, 1961, gifts are categorized based on who the donor is and the value of the gift. The taxation rules are as follows:
1. Gifts from Specified Relatives-Tax-Exempt
- If the gift is received from a blood relative, such as parents, children, spouse, siblings, or grandparents, it is completely tax-free, regardless of the amount.
- Gifts from in-laws, cousins, and distant relatives do not qualify for this exemption.
2. Gifts from Non-Relatives-Taxable if Above ₹50,000
- If a property is gifted by a non-relative, and its value exceeds ₹50,000, the entire amount is taxable under 'Income from Other Sources' in the recipient's hands.
3. Taxation of Immovable Property
- If an immovable property is gifted without consideration (for free) and its stamp duty value exceeds ₹50,000, the recipient must pay tax on the full stamp duty value.
- If a partial payment is made, and the difference between the stamp duty value and the amount paid exceeds ₹50,000, the excess amount is taxable.
Taxable Gifts
Gifts other than those falling under the exempt categories are taxable. This includes:
Monetary Gifts: Any sum of money exceeding Rs. 50,000 received by an individual or HUF is taxable as income from other sources.
Immovable Property: Gifts of land or buildings are taxable if the stamp duty value exceeds Rs. 50,000, unless received from relatives or on marriage.
Moveable Property: Prescribed movable property like shares, jewellery, or art, received without consideration exceeding Rs. 50,000, is taxable. Similarly, if the fair market value of such property exceeds the consideration paid by Rs. 50,000, it is taxable as income from other sources.
Type of Gifts | Money Limit | Amount taxable |
Any sum of money without consideration | Sum > Rs. 50,000 | Entire sum of money |
Immovable property without consideration | Stamp duty value > Rs. 50,000 | Stamp duty value of the property |
Any immovable property for inadequate consideration | Stamp duty value* exceeds consideration by > Rs. 50,000 | Stamp duty value Minus consideration |
Any property (jewellery, shares, drawings, etc.) other than immovable property without consideration | Fair market value (FMV)* > Rs. 50,000 | FMV of such property |
Any property other than immovable property for consideration | FMV exceeds consideration by > Rs. 50,000 | FMV Minus consideration |
Properties That Can Be Given As Gifts
Key requirements for a property to be gifted in India are:
- The property can be either movable or immovable in nature.
- The property must be an existing, tangible asset, and not a future property.
- The property should be transferable under the law.
The search results indicate that the donor must have the legal capacity to transfer the property, and the donee must willingly accept the gift. Certain types of properties, such as coparcenary property under Hindu law, may require additional consent from other family members for a valid gift deed.
Overall, the property gifted must meet these essential criteria to be considered a valid gift under Indian laws.
Steps to Register a Gift Deed in 2025
To make a gift deed legally valid, it must be registered with the Sub-Registrar of Assurances under the Indian Registration Act, 1908.
Step 1: Drafting the Gift Deed
- Prepare the gift deed on a stamp paper, including details of the donor, donee, property description, and any conditions.
- Mention that the transfer is voluntary and without consideration (payment).
Step 2: Payment of Stamp Duty
- Calculate stamp duty as per state rates.
- Pay the applicable amount via e-stamping, demand draft, or challan at the designated bank.
Step 3: Execution and Signing
- Both the donor and donee must be present at the time of execution.
- The gift deed must be signed in the presence of two witnesses.
Step 4: Registration at the Sub-Registrar Office
- Submit the signed gift deed, along with proof of identity, property documents, and address proof.
- The sub-registrar verifies the documents and completes the registration process.
Step 5: Collection of Registered Gift Deed
- Once registered, the donee receives the legally valid gift deed, proving ownership.
How is the stamp duty rate on Gift Deed Calculated?
The stamp duty rate on a Gift Deed is calculated based on various factors, including the market value of the property, the location of the property, the relationship between the donor and the donee, and the specific regulations of the state where the gift deed is being executed. Different states in India have varying percentages for calculating stamp duty on gift deeds, ranging from 2% to 7% based on the property value. Additionally, some states offer exemptions or concessions on stamp duty for gifts between family members or blood relatives. The stamp duty rate can also be influenced by the gender of the property owner, the type of property being gifted (residential or commercial), and the age of the owner, with senior citizens often receiving subsidies on stamp duty charges. Understanding these factors and consulting legal experts can help individuals accurately determine and comply with the stamp duty rate applicable to their specific gift deed transaction.
Payment of Stamp Duty: Who Pays?
The responsibility for paying stamp duty on gift deeds falls on the the giver of the gift along with other associated charges at the time of registration of the deed. Since any payment from the receiver of the gift would amount to paying money to the owner and bring the transaction into the area of a 'sale' under the provisions of the Transfer of Property Act, the doner pays the stamp duty and registration fee on gift deeds.
Legal Requirements For A Gift Deed
In India, to ensure it is valid and enforceable Gift Deeds must adhere to specific legal requirements. Firstly, the Gift Deed must be executed on non-judicial stamp paper of appropriate value as prescribed by the Stamp Act of the relevant state where the property is situated. This ensures that the document is legally binding and serves as evidence of the transfer of ownership. Additionally, the Gift Deed must be registered with the Sub-Registrar of Assurances. Registration lends legality and authenticity to the transfer, making it effective against third parties and preventing disputes regarding ownership in the future.
Further, the Gift Deed must contain essential details, including the identities of the donor and donee, a precise description of the property being gifted, and a clear statement of transfer without any consideration. Acceptance of the gift by the donee must also be explicitly mentioned in the deed. These elements contribute to the clarity and completeness of the document, minimizing the scope for ambiguity or misinterpretation. Compliance with these legal requirements not only safeguards the interests of both parties involved but also upholds the integrity of property transactions within the legal framework of India.
Advantages of Gift Deed
Gift Deeds offer several advantages for both the donor and the donee:
Transfer of Ownership: Gift Deeds facilitate the legal transfer of ownership of property from the donor to the donee without the need for monetary consideration. This allows individuals to gift assets to family members, friends, or charitable organizations as a gesture of goodwill or inheritance planning.
Tax Benefits: In India, gifts received from specified relatives, including parents, siblings, and spouses, are exempt from income tax under certain conditions. By utilising Gift Deeds, individuals can transfer assets to their loved ones while minimising tax liabilities for both the donor and the donee.
Avoidance of Probate: Unlike assets transferred through wills, gifts made via Gift Deeds do not require probate proceedings after the donor's demise. This expedites the transfer process and allows the donee to gain immediate possession and control of the gifted property.
Asset Protection: Gift Deeds can be used strategically as part of asset protection planning. By transferring assets to family members or trusts through Gift Deeds, individuals can shield their property from potential creditors or legal claims.
Family Harmony: Gift Deeds help foster harmony in the family by allowing individuals to distribute assets equally among family members which can prevent disputes and conflicts over inheritance after the donor's demise, promoting peace and understanding within the family unit.
Also Read: E-District Portal: Objectives, Benefits, Services & States Covered
Key Considerations for Gift Deeds in 2025
- Relationship-Based Exemptions
- Lower stamp duty rates apply only when gifting to immediate family members.
- Transfers to friends, business partners, or distant relatives are taxed higher.
- Tax Planning Before Gifting
- Gifting property to non-relatives can lead to a higher tax liability for the donee.
- Transferring assets to spouses or children can be beneficial for estate planning.
- Revoking a Gift Deed
- Gift deeds cannot be revoked once registered, unless a revocation clause is included at the time of execution.
- Inheritance vs. Gift Deed
- If a property is inherited through a will, no stamp duty or tax is applicable.
- In contrast, gifting property during one's lifetime incurs stamp duty.
- State-Specific Variations
- Each state has different stamp duty rates and exemption rules.
- It's advisable to consult a lawyer before executing a gift deed to avoid legal and tax issues.
Conclusion
A gift deed is a legally recognized method of transferring property, but it comes with stamp duty obligations and tax implications that vary by state and recipient relationship. While gifting to immediate family members often attracts lower stamp duty and tax exemptions, gifting to non-relatives may result in higher financial liabilities. Proper legal documentation and registration are essential to make the transfer valid and avoid future disputes. Before executing a gift deed in 2025, it is advisable to understand state-specific rules, tax considerations, and registration procedures to ensure a smooth and compliant property transfer.
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