By a gift, we mean anything that is willingly given to anyone without anything in return or any payment. It also means any natural talent or ability that an individual possesses.
There is a clear-cut legal definition of gift. Section 122 under the Transfer of Property Act talks about a gift being the transfer of any immovable/moveable property which is done willingly and voluntarily and also minus any consideration. The transferor or donor gifts the property to the donee or transferee. The latter should also accept this gift. Some gifts could be free from taxes, while some could come with tax payment requirements as well. Gifts made after the donor has exceed the lifetime/annual exemption will attract taxes.
In the real estate sector, gifts of property can be made under Section 122 as mentioned above. A gift deed is required for the transfer of immovable property. This will have all details about the donor, donee, and the property in question. However, no monetary exchange is needed in this case. This legal document will talk about this legal and voluntary transfer of property. However, the donor should not be financially insolvent at the time while not using this route to avoid taxes.
All such gift deeds should have registration with the sub-registrar. This is compulsory under the Registration Act of 1908 (Section 17) and the Transfer of Property Act (Section 123). The transfer will only have validity upon being registered. Upon the registration of any gift deed, any title ownership change of property will be valid. The recipient can transfer the property further to another individual and a gift deed will again be needed in this case. Here are some other points worth noting in this regard:
• It can be either immovable/movable property.
• It should be a transferable property which currently exists.
• It should be actual/real and tangible.
• The donor and donee should both be alive while the gift is being executed.
• Both parties should be present at the sub-registrar’s office for registering the gift deed.
• There should be two other witnesses signing the document.
• The deed should be stamped with any suitable non-judicial stamp, based upon the property value.
• Minors cannot form gift deeds or transfer property.
• If the donee is a minor, then any natural guardian may accept the donor’s gift on his/her behalf. The guardian will only manage the property on the donee’s behalf until he/she attains adulthood. These guardians include fathers, paternal grandfathers, and/or their executors.
