45699

While gifting a property, stamp duty depends on relationship

There is no stamp duty required to be paid in case of a will
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First Published: Mon, Oct 22 2012. 07 34 PM IST
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I am the primary owner and my mother is the co-owner of a flat as per the initial agreement. However, I want her to be the sole owner. Do I need to opt for a gift or a release deed? Also, do I need to have a will made stating post her demise I will be the only son to acquire the flat? What will be the percentage I will have to pay as stamp duty and registration?
—Niraj Khanna
While answering the query, we are assuming that the flat that you have referred to in the query is situated in Mumbai and that the provisions of the Bombay Stamp Act, 1958, are applicable and also that the said flat is not an ancestral property.
Since you and your mother are co-owners of the said flat, you may execute either a gift deed or a release deed to transfer your share to your mother.
In the event that you gift your share in the said flat to your mother, the gift deed would be stamped under article 34 of schedule 1 of the Act. Since you are gifting your share in the said flat to a family member, the said gift deed would fall under the proviso of the above-mentioned article, which provides that the stamp duty payable on the gift deed under which property is being gifted to a family member, would be 2% of the market value of the property.
In the event that you release your share in the said flat in favour of your mother, the release deed would be stamped under article 52 of schedule 1 of the Act which provides that the stamp duty payable on a release deed:
(i) if the release is of an ancestral property or any part thereof in favour of a family member is Rs.200, and
(ii) in any other case the stamp duty payable is 5% of the market value of the property.
Thus, as stated aforesaid, assuming the said flat is not ancestral property, it is clear that, from the stamp duty perspective it would be advisable for you to execute a gift deed in favour of your mother, gifting her your share in the said flat and stamp the gift deed under article 34 of schedule 1 of the Act at 2% of the market value of the property.
As per the applicable provisions of the Registration Act, 1908, since the gift deed would deal with immovable property, the same would need to be registered with the applicable sub-registrar of assurances. In your case, the registration charges payable would be 1% of the market value of the property, subject to a cap of Rs.30,000.
With regard to your second query, it would be advisable for your mother to execute a will, even if you are her only legal heir so as to avoid claims by any other relatives to her estate. It may be noted that there is no stamp duty required to be paid in case of a will and this document need not compulsorily be registered under section 17 of the Registration Act, 1908.
Queries and views at mintmoney@livemint.com
Shabnum Kajiji is partner, Wadia Ghandy & Co. Advocates, Solicitors and Notaries
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First Published: Mon, Oct 22 2012. 07 34 PM IST
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