An owner of the property can transfer the same in many ways like Will, Gift or Sale.
Among family and friends, the property is usually transferred by way of executing a Gift Deed.
The process of Gift deed creation is generally the same in all the States of India. There are certain requirements which are specific to each state, e.g. the criteria for imposing Stamp duty varies from State to State. The difference is there in stamp duty, and registration charges as States can charge Stamp duty and registration fees as per their revenue requirement.
For Gift deed in favour of blood relations, most of the States charge nominal Stamp duty and registration fees. In some states, there is a complete waiver also.
Read: Tax for NRIs on gifts of money and property
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The process of gift deed creation requires:
- Drafting of gift deed on stamp paper- In the drafting of Gift deed, the value of stamp paper depends upon the value of the property to be gifted. The gift deed must mention that gift is being made voluntarily and without any consideration. The donor must be solvent.
- Signature of donor and donee on the deed – signature of the donee on the deed signifies the acceptance of the gift by the done which is necessary to make the gift valid. Acceptance of gift must be made during the lifetime of the donor otherwise the gift is rendered invalid.
- Attestation by witnesses
- Payment of stamp duty and registration charges
Under section 17 of the Registration Act 1908, registration of a Gift Deed is compulsory. The stamp duty and the registration charges payable in each State are different and therefore, it is better to consult a local lawyer for making a gift deed.
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Moveable property can be gifted without any deed. Delivery and acceptance of the moveable property complete the gift transaction.
In the State of Gujarat:
- Stamp duty payable is governed by the Bombay Stamp Act, 1958 as applicable to the State of Gujarat.
- Stamp duty payable is 3.5 % of the market value of the property being gifted.
- Surcharge @ 1% is also applicable over the stamp duty basic rate
- Registration charges are paid in addition to the stamp duty.
Stamp duty payable depends upon the value of the property to be gifted. Valuation of property should be carried out by experts in the field to calculate the correct stamp duty.
In the state of Gujarat:
- Draft models of gift deed are present on the official website, in English as well as the Gujarati language.
- Property can be registered online also.
- There is a provision for e-payment of Stamp duty and registration charges.
Since the registration of the deed of immovable property is mandatory, unregistered deed is not recognised in law. Therefore, it is advisable to register it as per the prevalent State Laws. In case, the gift deed of immovable property is not registered, the title does not pass to the donee. For Registration, the Gift deed is presented to the office of the local Sub -Registrar within whose territorial jurisdiction, the property or a portion of the property to be gifted lies.
Important points: In the State of Gujarat –
- There is a penalty of 200% of the value of the gift deed executed, for evading stamp duty.
- After GST, there is no impact on stamp duty and registration fees.