Gift deed lets one gift assets without exchange of money
My father has left behind a house, which he has divided among his three children. Only I stay in the house. My siblings want to gift their portions to me without consideration. However, I am of the opinion that I should give them some monetary gift as part of a family settlement. Will this be viewed as a money transaction? Also, the property has not been mutated. Can we apply for the mutation to be in only my name and my siblings sign as witnesses?
We are assuming that you are governed by provisions of Hindu laws, and that after the demise of your father the property has been jointly inherited by you and your siblings.
To answer the first query, your siblings have the following two ways to transfer their share, without consideration:
Gift deed: Your siblings may execute a gift deed in favour of you thereby gifting their respective inherited portions in the property to you. A gift deed allows one to gift his assets or transfer ownership without any exchange of money. The gift of immovable property must be in accordance with section 122 of the Transfer of Property Act, 1882.
Your siblings must transfer their portions voluntarily, without consideration, and it must be accepted by you during your lifetime and while they are still capable of giving.
Transfer must be effected by a registered and stamped instrument signed by or on behalf of your siblings and must be attested by at least two witnesses.
Stamp duty and registration charges payable on the gift deed differ across states. In some, including Maharashtra, there is a remission in stamp duty on a gift deed when the gift is between stipulated family members or relations.
Relinquishment deed: A person uses this instrument to transfer his rights in a particular property to another joint owner(s) or co-owner(s). Such a transfer is irrevocable even if it is without any exchange of money or for monetary consideration.
Both these deeds of transfer have to be done without consideration. If consideration is paid, it will give the transaction the colour of a sale. So, if you pay any kind of consideration, the deed of transfer will be considered to be a deed of sale and stamp duty will be payable in accordance with the provisions of the stamp Act as applicable to a conveyance.
Further, it is mandatory to register the above mentioned deeds of transfer with the sub-registrar of assurances within whose sub-district the property is situated, as per the Registration Act, 1908, and within the time periods stipulated therein. Otherwise, the transfer will be held invalid.
You could, however, gift certain sums of money to your siblings. This transaction would be independent of the gift of immovable property by your siblings to you. However, it is advisable to speak to a tax consultant or a chartered accountant in this respect.
In response to the second part of the question, mutation of property is the recording in the revenue records of the transfer of title of a property from one person to another. The mutation in the municipal records is for the purpose of payment of property taxes and it does not transfer or give in any manner legal title to the person to whom the property has been mutated. The procedure, documentation required and the fees payable varies from state to state.
Normally in case of inheritance, a death certificate of the original owner and an affidavit together with a no-objection certificate from the other legal heirs of the deceased or their successors in interest are required for mutation of land.
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