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Gift Deed Registration and Stamp Duty in Telangana

Updated: Apr 2

A Gift Deed often referred to as a Deed of Gift is a legal instrument for the purpose of transferring ownership of assets that can be movable, immovable properties from one individual, designated as the donor, to another individual, termed as the donee. Through a non-monetary exchange transaction. This document serves as a prevalent means of gifting property and assets to family members, friends, or other parties, and holds legal weight under the Transfer of Property Act, 1882, Registration Act, 1908, as well as the Income Tax Act. Understanding the legal prerequisites and procedures associated with the gift deed is essential to facilitate a seamless transfer of ownership. Definition of Gift under the Transfer of Property Act:

According to Section 122 of the Transfer of Property Act, 1882, a "gift" entails the voluntary transfer of existing movable or immovable property from a donor to a donee, without any consideration, and must be accepted by or on behalf of the donee.


Legal Requirement for registration of Gift Deed: It is mandatory to register the gift deed, as per the Transfer for Property Act and Registration Act 1908. As per Section 123 of the Transfer of Property Act, 1882, the transfer of immovable property through a gift must be formalised via a registered instrument. This instrument must be signed by or on behalf of the donor and attested by at least two witnesses. Alternatively, for movable property, the transfer can be executed either through a registered instrument or by delivery.

Furthermore, Section 17 of the Registration Act, 1908 mandates the registration of instruments of gift pertaining to immovable property. This registration is vital to establish the legality, authenticity, and evidentiary value of the gift deed.


Step by Step Guide for Registration of Gift Deed: Drafting the Gift Deed: The first step is to draft the gift deed. The deed should include details such as the names and addresses of the donor and the donee, a description of the property being gifted, any conditions or restrictions attached to the gift, and the acceptance of the gift by the donee. It's advisable to seek legal assistance to ensure the deed complies with legal requirements and accurately reflects the intentions of the parties involved.


Paying of Stamp Duty: Determine the stamp duty applicable to the gift deed based on the type of the property transaction. The Chargable Value is based on the Market value of the property. Stamp Duty charges in Telangana are as below:

Document

Stamp Duty

Transfer Duty

Registration Fees

(i) Gift in favour of Family Member


(a) Property falling in any area except Gram Panchayat

2.00%

0.50%

0.5% subject to a minimum of Rs.2,000/-and maximum of Rs.25,000/-

b) Property falling in Gram Panchayat

2.00%

0%

0.5% + (0.5% subject to a minimum of Rs.2,000/- and maximum of Rs.25,000/-)

(ii) Gift in favor of Person other than Family Member.


(a) Property falling in any area except Gram Panchayat

5%

1.5%

0.5% subject to a minimum of Rs.2,000/- and maximum of Rs.1,00,000/

b) Property falling in Gram Panchayat

5%

0%

1.5% + (0.5% subject to a minimum of Rs.2,000/- and maximum of Rs.1,00,000/-)

iii) Gift in favour of Government/ Gram Panchayat/Municipality/Municipal Corporation/UDA/ IALA

0%

0%

0.5% subject to a minimum of Rs.2,000/-and maximum of Rs.10,000/--

Execution of the Gift Deed: The donor and the donee must sign the gift deed in the presence of at least two witnesses. The witnesses must also sign the deed to attest to the execution.

Visit the Sub-Registrar's Office: Take the executed gift deed along with the required supporting documents, such as identity proofs of the parties involved, property documents, and proof of payment of stamp duty, to the sub-registrar's office within whose jurisdiction the property is located.

Submission and Verification: Submit the gift deed and supporting documents to the sub-registrar for verification. The sub-registrar will examine the documents and ensure that they comply with legal requirements.

Registration: Once the sub-registrar is satisfied with the documents, the gift deed will be registered. Registration involves recording the details of the gift deed in the register maintained by the sub-registrar. The parties involved, along with the witnesses, may be required to provide their thumb impressions or signatures in the register.

Receipt of Registered Gift Deed: After registration, the sub-registrar will provide a certified copy of the registered gift deed. This certified copy serves as proof of the transfer of ownership and should be kept safely by the parties involved.

Note: It's essential to complete the registration process within the prescribed time frame to avoid any legal complications. Additionally, consult with legal experts or professionals for guidance specific to your situation and jurisdiction.


Essential Documentation for Registering a Gift DeedTo officially register a Gift Deed, it is necessary to visit the Registrar/Sub-registrar's office. In this process, specific documents need to be provided, which include:

  1. The original Gift Deed.

  2. Valid identification proof, such as an Aadhar Card, Driving License, or similar documents.

  3. PAN Cards of both the donor and the donee.

  4. Supporting documentation, like a sale deed or Title Deed, to verify the donor's property ownership.

  5. A passport-sized photograph.

  6. Identification proof for the witnesses.

  7. Address proof for the witnesses.

Can a gift deed be revoked by the parties ? 

Yes, a gift deed can be revoked under certain circumstances as outlined in Section 126 of the Transfer of Property Act, 1882. 

  1. Agreement: If the donor and donee agree that the gift can be revoked if a specific event happens that isn't controlled by the donor, then it can be revoked.

  2. Revocability Agreement: If both parties agree that the gift can be revoked entirely or partly at the donor's will, this agreement is not valid.

  3. Similar to Rescission: The gift can be revoked in situations similar to when a contract can be canceled, except for cases where there's no consideration or if it fails.

  4. Exceptions: Apart from the above conditions, a gift cannot be revoked. However, the rights of someone who bought the property for value without knowing about the potential revocation are protected.

Tax Implications of Gift Deeds:

In accordance with income tax regulations, the taxation of gifts is subject to specific rules.

  1. Annual Exemption: Individuals can receive gifts up to Rs 50,000 in a year without incurring any income tax liability. Beyond this threshold, the total value of gifts becomes taxable.

  2. Special Treatment for Close Relatives: Gifts between certain close relatives are fully exempt from taxation without any upper limit. These close relatives include parents, spouse, siblings, siblings of the spouse, lineal ascendants, lineal descendants, and the spouse of the aforementioned relatives.

  3. Taxation of Gifted Property: When receiving a house property as a gift from a relative, tax implications may arise when you decide to sell the property. The property's cost for income tax purposes is determined by the amount paid by any of the previous owners. The profits from the sale are categorized as short-term or long-term based on the cumulative holding period, including that of the previous owner who made the payment.

    • Short-Term Gains: If the total holding period is less than 36 months, the profit from the property's sale is treated as short-term income. It is added to your regular income and taxed at the applicable slab rate.

    • Long-Term Gains: If the holding period exceeds 36 months, you can benefit from indexation on the property's cost. Additionally, you have the option to claim an exemption from paying a 20% long-term capital gains tax. This exemption can be availed by investing in a residential house or in capital gains bonds issued by entities such as the Rural Electrification Corporation (REC) or the National Highway Authority of India (NHAI).

 

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