GIFT DEED IN INDIA

Overview

Anything that someone gives to another out of love, compassion, or gratitude is considered a gift. It should be done without taking into account any financial worth or payment. It is the process by which ownership is passed from the one making the transfer to the recipient. It can be passed from parents to kids, siblings to siblings, spouses to spouses, coworkers, etc. There must be no compulsion or force involved; the transfer must be voluntary. It is freely given to someone in exchange for nothing. Section 122 to Section 129 contained in Chapter VII of Transfer of Property Act, 1882 deals with gifts. There are two parties involved i.e the donor and donee. The donee is the person to whom the gift is delivered, while the donor is the one who distributes it.

The donee must accept the gift, the property must exist, and the gift must be transferred. The recession might cancel the gift deed if these requirements are not met. If a condition has already been accepted by both parties, it may also be withdrawn.

This article goes into great length on the fundamentals of gift deeds, revocation, registration, the registration process, gift tax, etc.

GIFT

A gift is defined as the voluntary and uncompensated transfer of certain existing moveable or immovable property from one person, known as the donor, to another, known as the donee, and accepted by or on behalf of the donee, according to Section 122 of the Transfer of Property Act, 1882.

The definition of a gift is the transfer of any property, whether it be immovable or movable, and it must be made freely and without payment from the donor (the person making the transfer) to the donee (the person to whom it is transferred).

A COMPLETE GIFT IS THE ACCEPTANCE + OFFER + TRANSFER.

Acceptance timing – the gift becomes void Acceptance must occur while the donor is alive and capable of giving. If the donee passes away before the acceptance takes place.

Essential Elements Of a Valid Gift

Transfer of Ownership

A gift entails the transfer of ownership, where the entire interest of the individual in the property is conveyed to another person.
The individual who transfers the interest is referred to as the ‘donor,’ while the individual receiving the interest is known as the ‘donee.’
The donor must have the legal capacity to enter into a contract; they must be an adult and of sound mind.
Conversely, the donee does not need to have the capacity to enter into a contract; a minor or someone of unsound mind, though unable to engage in a contract, can still accept the property.

Existing Property

According to Section 124 of this Act, the property being gifted must exist at the time the gift is made, although its transfer may occur either now or later.
Both movable and immovable properties can be given as gifts.
A gift that includes future property is invalid concerning the future assets.
An actionable claim qualifies as an existing property, and it may be gifted.

The Characteristic Required For a Gift Is That It Should Be Provided Freely.

Owning must be transferred without exchanging value.
The Indian Contract Act, 1872 defines ‘consideration’ in Section 2(d) and the Transfer of Property Act, 1882 also uses it in the same sense.
According to Section 2(d) of the ICA, if the promisor or any other person does, refrains from doing or promises to do anything at the request of the promisor, it is considered as consideration for the promise.

Voluntary transfer with free consent

Donations must be made voluntarily by the donor, that is, with their free will and consent.
If the consent of the donor is not free, i.e., if it is given under coercion or undue influence, the donation will not be a valid donation.
Sections 15 and 16 of the Indian Treaties Act, 1872 define coercion and undue influence respectively.

Receiving a Gift

Consent to the gift by the donee is required, and consent may be express or implied.
When the donee is a minor or insane, the donation must be accepted on his behalf by a competent person.

Cancellation Of Gift Deed

As per Section 126 of the Transfer of Property Act, 1882, the gift deed can be cancelled if the donor and recipient mutually agree on a specific event beyond the donor’s control. However, if parties can cancel a gift based solely on the donor’s wish, it is considered null either completely or partially.

The gift can be taken back if the gift deed contract is cancelled. Section 126 stipulates two situations under which the gift deed can be cancelled. Upon agreement between the giver and receiver. Through the cancellation of the contract.

Cancellation Through Mutual Consent

Both the giver and recipient can decide to revoke the gift at any time based on the occurrence or non-occurrence of an event that is not under the giver’s control. The revocation of a gift deed must be clearly stated in writing; verbal wishes of the parties are not sufficient to cancel the contract. If the condition is not specified in the gift deed agreement but separately, the agreement remains valid.

Once The Transfer Of The Gift Is Completed And The Agreement Is Finalized, It Cannot Be Cancelled.

Example: A grants his field to B on the condition that if B and his descendants pass away while A is still alive, A has the right to reclaim the field. If B passes away without any rightful successors while A is alive, A can reclaim ownership of the land.

The revocation remains valid as it was based on unpredictable future events rather than A’s will.

Revocation Due To a Downturn

A gift is an unreciprocated transfer from the giver to the recipient with no expectations and mutual agreement. According to Section 126 of the Transfer of Property Act, 1882, a gift can be cancelled if consent was obtained through coercion or undue influence, making the contract voidable per Section 19 of the ICA, 1872. The contract of the deed of gift is valid only if the donor agrees. Under Section 64 of ICA, 1872, the agreement is able to be cancelled.

The deed of gift can be cancelled for these two reasons. Only the donor themselves can revoke it, not any other person chosen by them. Following his passing, his rightful heirs have the ability to cancel the agreement if they can demonstrate that the consent was not given freely and was a result of undue influence or coercion. However, the donor has 3 years from the date of awareness to file a claim. If the donor has confirmed the gift either directly or indirectly, he cannot later cancel the gift deed.

Types Of Gift Deed

Irrevocable – unable to be cancelled.
Conditional – it can be cancelled if there is a condition agreed upon by both parties.

Kinds of Gifts

Void gifts may be divided into two types:

Void Gifts
Onerous Gifts

VOID Gifts

Gifts used for illegal intentions.
Gifts given with a condition that cannot be fulfilled because it is either impossible or against the law.
Gifts given by someone who is not legally able to enter into a contract.
When the recipient of the present passes away before acknowledging it.
A present that includes both current and future assets is invalid in regards to the future assets.

Burdened Presents

A present is considered burdensome if it comes with a responsibility or duty. This part is focused on the principle of ‘qui sentit commodum sentire debet et onus’, stating that those who benefit should also shoulder the responsibility which means that he who receives the advantage must also bear the burden.. Section 127 of this legislation addresses the topic of burdensome presents.

The information mentioned in it suggests that-
If a gift includes multiple items being transferred to one person, with only one item being burdened by an obligation, the recipient must accept the gift in its entirety to receive anything.

If a gift consists of multiple transfers to the same person, the recipient can choose to accept one and reject the rest, even if one is helpful and the others are burdensome.

Gifts that come with obligations cannot be accepted by someone who is not capable of entering into a contract. However, if he keeps the property after becoming capable of entering into a contract and understanding the responsibility, he is then obligated.

Burdonsome Presents

Onerous gifts are gifts that are more of a burden than a benefit. ‘Onerous’ is a word that has the same meaning as ‘burdened’. A property is considered burdensome if its obligations surpass its advantages. When a property is given in such a way, it is known as a burdensome gift or a gift that does not bring any benefits. The donee has the option to refuse such gifts.

If a gift consists of giving multiple things to one person in a single transaction, with only one item having an obligation attached to it, the recipient must accept the entire gift in order to receive anything. If a gift consists of multiple individual transfers to the same recipient, the recipient can choose to accept some and reject others, even if some are beneficial and others burdensome.

This concept is derived from the motto “qui senit commodum sentire debet et onus” indicating that whoever receives a benefit from a deal should also bear its responsibility. The recipient must decide when they receive two properties, one difficult and the other profitable, in a single gift. He can either choose to accept both the gift and the burdensome property, or decline them entirely. If he decides to take the beneficial part, he must also take the burdensome part that comes with it. Nonetheless, a solitary transfer plays a vital role in this Section. It is only when both the burdensome and profitable properties are transferred together in one transaction that a mutual acceptance or rejection of the duty is required. A donee cannot enter into a contract or receive property with any obligations attached, and is not obligated by accepting it.

However, if he keeps the property given to him after becoming capable of entering into a contract and understanding the responsibility, he becomes legally obligated.

GIFT DEED

A gift deed is a lawful paper utilized to transfer property ownership as a gift from one individual to another. Giving a gift is optional, and the individual providing the gift is called the ‘donor,’ while the individual receiving the gift is the ‘e.’ Gift deeds are frequently utilized for the transfer of properties and serve as a beneficial method for passing on assets and wealth.

What Does a Gift Deed Entail?

A gift deed is a formal document enabling a property owner to gift their property to another person. It is an act of giving that is done willingly, and the recipient does not need to provide anything in return for the gift.

Format For Transferring a Gift

A gift deed must be signed on non-judicial stamp paper or e-stamp paper, which is accessible in specific states. The stamp paper’s value is determined by the state where it is signed and the location of the property. Every state in India has regulations regarding the stamp duty amount for gift deeds, which must be calculated based on the specific details of the case.

Components Of a Gift Deed

Here are some important things that should be mentioned in the gift deed format.

The place and date on which the gift deed is to be executed
Relevant information on gift deed regarding the donor and the donee, such as their names, address, relationship, date of birth and signatures
Complete details about the property for which you draft a gift deed
Two witnesses to bear testimony of the gift deed and their signatures

Important Clauses In a Gift Deed

When drafting a gift deed in India, several important clauses must be included:

Details of the donor and donee: Full legal names, addresses, and relationships.
Description of the Gift: A clear description of the gifted property or asset.
Free will and consent: A statement that the gift is made voluntarily without coercion.
Transfer of ownership: Confirmation that the ownership rights are being transferred immediately and unconditionally.
Consideration clause: A declaration that the gift is made without any monetary exchange.
Revocation clause: Conditions under which the gift can be revoked, if applicable.

These clauses ensure legal validity and clarity in the gift deed.

Documents Required For Gift Deed Registration

The Following Documents Are Required For Registering a Gift Deed:

Original gift deed
ID proof like Aadhaar Card, Driving License among others
PAN card of the donor and donee
Document such as a sale deed or title deed to prove the ownership of the donor
Passport size photograph he
ID proof of the witnesses