Gift Deed: Understanding the Ins and Outs

What is a Gift?

A gift is a voluntary transfer of property (movable or immovable) from one person to another without consideration. In case of gift, the person transferring the property is known as the donor and the person accepting the gift is known as the done. The gift to be legally valid must be accepted by or on behalf of the done during the lifetime of the donor and while he is still capable of giving. The essential elements of a valid gift are:

1. There must be a transfer of ownership
2. The transfer should be made of an Existing Property
3. The transfer should be made without consideration
4. The donor transfers the property voluntarily with free consent
5. The gift must be accepted by the done during the lifetime of the donor

People Also Read: Different Types Of Gift Deeds?

Modes of making a Gift

Depending on the nature of the property to be transferred, the law prescribes two modes for effecting a gift.  In case of transfer of immovable property by way of gift, registration is necessary irrespective of the value of the property, that means a gift deed is prepared in which the details of the transaction are documented which is signed by the donor and attested by two competent witnesses and duly stamped and registered. 

In case of transfer of movable property, it can be transferred by the delivery of possession, which means the gift is complete once the subject matter of the gift is handed over to the donee. A gift deed of movable property is option. Valuation of the property does not affect the validity of the gift of movable property effected by delivery of possession. 

Why the need for a gift deed?

A gift deed is an instrument by way of which property is transferred by way of gift from one person to the other. A gift deed is a preferred mode of transfer so as to avoid any litigation arising out of succession or inheritance claims. A registered gift deed is an evidence in itself that the property mentioned therein has been transferred way of gift from the donor to the done. 

Important Clauses to be incorporated in a Draft Gift Deed:

A draft gift deed must include the following details:

1. The date on  which the deed is executed 
2. Place at which the deed is registered
3. Names of the donor and the donee, their address, date of birth and the relationship between the donor and the donee
4. Signatures of the donor and the donee
5. Complete details about the property to be transferred as gift
6. Any rights or liabilities attached to the gift should be mentioned in the gift deed
7. Clause for Consideration must be mentioned in the Gift Deed. It should be mentioned that there is no exchange of money or any other type of consideration involved. It should be clearly mentioned that the transfer of property is being made out of love and affection. 
8. The gift deed should clearly mention that the transfer is voluntary and the transferor has a very clear intention making the transfer of the property
9. A clause specifying the rights of Donee must be included. 
10. The details of the delivery of possession whether it would be expressed or implied, must also be mentioned
11. To be cautious, it is advisable to include a revocation clause in the gift deed to avoid any kind of future issues/litigation complications
12. Two witnesses and their signatures to be affixed in the gift deed
13. The gift deed must be printed on stamp paper after paying the required amount which would be calculated based on the valuation of the property
14. Lastly, the deed should be registered at the registrar or sub-registrar’s office.

Documents required for gift deed registration

For the transfer of a property through a gift deed, the following documents are required at the time of registration:

1. Aadhar Card of the parties
2. ID Proofs, like PAN, Driver’s License, Passport, etc;
3. PAN card of both parties 
4. Original Gift Deed 
5. Sale deed or other original document to prove the title of the donor to the Property
6. The Encumbrance Certificate, if any
7. Any other agreements pertaining to the property
8. Other documents/materials as may be required as per the requirements of the law of the place of registration

Draft of Gift Deed 

The draft of the Immovable property is given below. The draft gift deed of movable property and the draft gift deed of ancestral property would be on the same lines. There would be certain changes with regard to the description of the property and the mode of delivery of the property.

THIS DEED OF GIFT is made at …….. this …….. day of.. ….. between ……. hereinafter referred to as ‘the Donor’ of the One Part and ……. hereinafter referred to as ‘the DONEE’, of the Other Part.

WHEREAS the Donor is seized and possessed of the land and premises situated at ……… and more particularly described in the Schedule hereunder written.

AND WHEREAS the DONEE is related to the Donor as ……..

AND WHEREAS the Donor desires to grant the said land and premises to the DONEE as a gift in consideration of natural love and affection as hereinafter mentioned ‘

AND WHEREAS the DONEE has agreed to accept the gift as is evidenced by his executing these presents.

AND WHEREAS the market value of the said property his estimated to be Rs …..

NOW THIS DEED WITNESSETH that the Donor without any monetary consideration and in consideration of natural love and affection, which the Donor bears to the DONEE, doth hereby grant and transfer by way of gift the said land and premises situate at ….. and more particularly described in the Schedule hereunder written together with all and singular the buildings, and structures. thereon and all the things permanently attached thereto or standing thereon and all the liberties, privileges casements and advantages appurtenant thereto And all the estate, right, title, interest use, Inheritance, possession. benefit, claims and demand whatsoever of the Donor To Have And To Hold the same unto and to the use of the DONEE absolutely but subject to the payment of all taxes, rates, assessments, dues and duties now and hereafter chargeable thereon to the Government or Municipality or other Local Authority.

AND he the Donor doth hereby covenants with the DONEE;

(a) That the Donor now has in himself, good right, full power and absolute authority to grant the said piece of land and other the premises hereby granted as gift in the manner aforesaid.

(b) The DONEE may at all times hereafter peaceably and quietly enter upon have occupied. possess and enjoy the said piece of land and premises and receive the rents, Issues, and profits and rents thereof and every part thereof to and for his own use and benefit without any suit, lawful eviction, interruption, claim or demand whatsoever from or by the Donor or his heirs, executors, administrators and assigns or any person or persons lawfully claiming or to claim by, from, under or in trust for the Donor.

(c) That the said land and premises are free and clear and freely and clearly and absolutely and forever released and discharged or otherwise by the Donor and well and sufficiently saved, kept harmless and Indemnified of and from and against all former and other estate, titles, charges and encumbrances whatsoever, had made, executed, occasioned or suffered by the Donor or by any other person or persons lawfully claiming or to claim by. from, under or in trust for the Donor.

(d) AND FURTHER that the Donor and all persons having or lawfully claiming any estate or Interest whatsoever to the said land and premises or any part thereof from under or in trust for the Donor or his heirs, executors. administrators and assigns or any of them shall and will from time to time and at all times hereafter at the request and cost of the DONEE do and execute or cause to be done and executed all such further and other acts, deeds, things, conveyances and assurances in law whatsoever for better and more perfectly assuring the said land and premises and every part thereof unto and to the use of the DONEE in the manner aforesaid as by the DONEE, his heirs, executors, administrators and assigns or counsel in law shall be reasonably required.

IN WITNESS WHEREOF the Donor as well as the DONEE (by way of acceptance of the said gift) have put their respective hands the day and year first hereinabove written.

THE SCHEDULE ABOVE REFERRED TO

Signed and Delivered by the within named Donor …….. in the presence of …….

Signed by within named DONEE …….. In the presence of …….

1……………

2……………

Frequently Asked Questions on Gift Deed

Q1. Is Stamp Duty payable for registering a gift deed?

Ans1. Stamp duty has to be paid for registering the gift deed. Stamp duty varies from state to state. 

Q2. Whether a Gift Deed be challenged in court?

Ans2. A Gift Deed can be challenged in court if the deed was made under threat, coercion, fear or against the will of the donor.

Q3. Whether Gift Deed property can be sold?

Ans3. The property received under Gift Deed can be sold provided, the property is transferred without any condition as to the further sale of the property.