Gifts and wills are two methods for transferring property to someone you care about without having to think about it.
If you wish to grant someone immediate access to your property, you can do so with a gift. You are permitted to give away whatever property you have gained on your own as long as you meet the conditions of the Indian Contract Act. Contracts can be entered into by anybody of sound mind, regardless of age, who is not a minor and is not an undischarged insolvent.
Immovable property can be given away by the property owner to a family member or a third party. Donors are people who make a gift, while donees are those who receive it. It is also critical to ensure that the receiver accepts the gift.
Both the giver and the donee must accept the gift throughout their respective lifetimes. When a donee accepts a gift deed from a blood relative, it shows that they agreed to the gift and are accepting it from the donor. At least two observers must be present to witness the signing of both parties’ signatures.
Gift Deed Definition
A “gift deed” is a voluntary transfer of existing moveable and immovable property made by a donor to a donee without payment, according to Section 122 of the Transfer of Property Act. A gift must, however, meet certain criteria: it must be physical, and both the donor and the recipient must accept and transfer ownership of it.
A Gift Deed in a Blood Relationship
A blood connection gift deed is a legal document used to transfer property ownership from one family member to another without any monetary exchange. It is a popular way for parents to transfer assets to their children without incurring any tax consequences or legal complications. In India, establishing a gift deed in blood relation can be relatively simple as long as certain formalities are done appropriately.
Characteristic of Gift Deed
The following characteristics include:
1. Lack of Reflection
If the recipient gains spiritually from the gift, there must be an emotional connection between the donor and the receiver. The Indian Contract Act, which specifies this mentality, considers gifting anything unnecessary. According to the Supreme Court, any financial incentive from the giver diminishes the nature of the donation.
2. In the Situation of a Donor
The ability to produce a blood connection gift deed is exclusively decided by one’s mental health and age. When transferring property to a family member, it is critical to be able to make critical decisions. The court will not intervene in the gifting process as long as the donor understands the property transfer. Once an individual reaches the age of 18, they can issue a gift deed in India.
3. A Beneficiary
There are no precise conditions specified by law to assess whether or not a person is qualified to receive an asset when gifting property through a gift deed in blood relation. However, the receiver must be alive at the time the deed is signed. It is also feasible to include two or more individuals who are blood relatives in a single donation deed. It is worth mentioning that the Transfer of Property Act makes it legal to give property to a psychotic person, a minor, or even an unborn child.
4. The Genuine Present
In the context of a blood connection gift deed, it is critical that the present being transferred is a tangible asset that the owner can freely give away. The property being gifted must be a physical thing, according to the Transfer of Property Act. Any gift deed that attempts to combine future property with existing assets is void. However, after the family has been partitioned, it is possible to give a share of Indian joint family property to a family member.
5. Transferring Act
A blood connection gift deed allows the owner of a tangible asset to transfer ownership to a family member. However, only an absolute landlord has the authority to assign property ownership, and failure to meet this criteria will result in the jurisdiction invalidating the gift deed. It is worth noting that if the donor and beneficiary agree on a partial gift deed, there will be no legal consequences imposed by the court.
In the context of a blood connection gift deed, it is critical that any donation be accepted while the giver is still alive and capable of making a logical decision. The receiver might indicate or suggest their readiness to accept the gift. It is vital to note that the donation cannot be moved if the intended recipient dies before accepting the gift. Furthermore, if a person is offered many tangible things, they can decline any of them. To demonstrate receipt, the recipient must either take possession of the tangible asset or hold the gift deed. Finally, the recipient has the option of accepting or rejecting any undesirable or impractical gifts.
Gift Deed Stamp Duty
The state in which the property is located and where the gift deed is executed would impose stamp duty on the gift deed prior to its execution. When a relative receives a gift, the stamp fee may be lower in several states. Under item 34 of Schedule 1 of the Maharashtra Stamp Act, 1958, the gift deed must be stamped. Because the gift deed is on behalf of your brother, the first provision of the clause indicates that the stamp duty due is 2% of the property’s market value. Because stamp duty differs by area, it is critical to contact with an expert regarding the stamp duty implications of your transaction.
Registration of Gift Deed
There must be an official record of the property’s deed. Registration must be completed simultaneously by both parties. Fees for registration are required. The following paperwork is required:
- The gift agreement
- Property index II, share certificate, society registration certificate, flat deed, Aadhaar, and PAN for both parties
- A copy of the most recent power bill and evidence of property tax payment
- Encumbrance certificate.
The buyer must pay stamp duty as a proportion of the current market value of the property. The stamp fee is lower when giving to close family members than when giving to others. The recipient will not be taxed if the gift is delivered to a specific relative.
Revocation and Cancellation of Deed
Contributors are obligated to prepare their legal copy in the event of the termination of a gift deed or a subsequent legal document. This papers can be kept by the contributor until the beneficiary gets the gifts.
It is possible for the donor and the recipient to jointly agree to suspend or revoke a gift deed and thereby end the contract. The gift deed can be rescinded if both parties agree, and the transaction can proceed.
Gift VS Will
It would be beneficial if you thought about writing a will to ensure that your possessions are handed to individuals of your choosing only after you die, and you want to enjoy and control those things while you are still living; hence, a will is the ideal alternative. A decision ensures that your property passes smoothly after your death and allows your candidates to collect your possessions.
Aside from money, there are other ways to help someone in desperate need, such as presents. Gifting should only be used to transfer property when it is absolutely essential. You may find yourself in a terrible financial situation if you give away all or a significant portion of your possessions to your legal heirs.
In India, a gift deed in blood connection is a frequent and simple means for parents to transfer assets to their children. While the process of establishing the deed is very straightforward, it is critical that all processes are performed correctly to avoid any legal or tax complications later on. If you have any questions about transferring property to family members or loved ones through a gift deed in blood relation, Vakilsearch is the best place to get answers.