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For a transfer of property through gift deed to be valid, it has to be registered

Under section 122 of the Transfer of Property Act, 1882, you can transfer immovable property through a gift deed

There are various ways through which you can transfer a property that you own. It could be by way of sale, Will or gift. A commonly used method, especially when transferring to a family member or friend, is executing a gift deed in favour of the recipient. Though no monetary transaction is involved, it is still necessary to register the gift deed to make the transfer valid.

WHAT IS A GIFT DEED?

Under section 122 of the Transfer of Property Act, 1882, you can transfer immovable property through a gift deed. Like a sale deed, a gift deed contains details of the property, the transferrer and recipient. But instead of a sale consideration in a sale deed, a gift deed allows you to transfer ownership without any exchange of money. Registering a gift deed with the sub-registrar is mandatory as per section 17 of the Registration Act, 1908, and as per section 123 of the Transfer of Property Act. If you don’t do this, the transfer will be invalid.

Besides that, once a gift deed is registered in the name of the recipient, only then can she apply for mutation of the property. Mutation is necessary to transfer utility connections in the name of the recipient. Also, for the recipient to be able to further transfer the property, a registered gift deed will be required.

WHAT ARE THE CHARGES?

Stamp duty and registration fee has to be paid to register a gift deed. In some states, stamp duty rates for property transfer by way of gift is the same as for sale or conveyance deed.

However, rules vary across states; certain state governments even offer some concession if the property is being gifted to blood relatives. For instance, in Delhi, the stamp duty in case of property transfer by way of sale or gift deed is the same—4% for men and 6% for women. In West Bengal, the stamp duty for sale or conveyance deed is 5% of the property’s market value in panchayat areas, and 6% of market value in municipal areas. In case of a gift deed, the rate is the same if the property is being gifted to a non-family member. If recipient is a family member, then only 0.5% of the market value of the property has to be paid as stamp duty.

THINGS TO REMEMBER

Once a gift deed of an immovable property is executed in favour of any recipient, the donor does not have the right to revoke or cancel the deed at a later stage, unless there is a specific clause mentioned in the deed. Section 126 of the property transfer Act provides for a situation wherein a gift deed may be revoked by the donor. For instance, if the property was gifted so that the recipient can reside in it, upon death of the recipient, the property will get transferred back to the donor if she is alive, else to the heirs of the recipient. Such details, however, need to be specifically mentioned in the gift deed.

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