Planning To Gift A Property? Here's Your Guide
Section 122 of the Transfer of Property Act defines 'gift' as the transfer of certain existing moveable and immoveable property made voluntarily, without any consideration, by a donor to a donee. There, however, are certain essentials of a gift – the gift, for example, must be tangible, and its ownership should be transferred by the donor and accepted by the donee.
Which property can be gifted?
You cannot gift everything that you own. If you are a Hindu, you may dispose of your self-acquired property. Similarly, if you are a coparcener, you may give away your coparcenary interest in a property, subject to fulfilment of certain conditions. A widow might in certain cases gift a small portion of the property inherited by her from her husband, but she cannot do so by will.
How is a gift different from a sale deed?
In sale deed, you give away your property in return for money. The deed is registered stating how much you have been paid for the property sold. But if it is gift, then it is a relinquishment of your assets without any monetary consideration. The government does not accept gifting between two non-relatives; it earns revenue through stamp duty on real estate transactions.
Can a gift be revoked?
A gift, once completed, is binding on the donor. It cannot be revoked by him, unless the property has been taken from him by fraud or undue influence.
When can a gift be taxed?
Normally, the donor is not liable to pay any tax on the property he has given up. However, in some cases, recipients are taxed under the head 'Income from other sources' under the Income Tax Act, 1961. Gifts are not taxed if they are received from relatives on the occasion of marriage, by way of will or inheritance, or from any local authority, fund or foundation registered under Section 12AA.
A relative can be the donor's spouse, sibling, sibling of spouse, sibling of either parent, etc.
Outside of this, a property received by an individual is taxable if the stamp duty value of such a property received without consideration (land or building or both) exceeds Rs 50,000.
For the purpose of making a gift of immovable property, the transfer must be registered, signed by or on behalf of the donor, and attested by at least two witnesses. The stamp duty, calculated on the basis of the market value of the property (differing from state to state), must be paid at the time of registration.
States have different laws, however, in the matter.
In Rajasthan, for instance, no stamp duty has to be paid if a husband is gifting an immovable property to his wife. However, 2.5 per cent of the property value has to be paid as stamp duty in case the property is being transferred in the name of father, mother, son, sister, daughter-in-law, grandson or daughter as a gift.
With inputs from Sunita Mishra