Gifting of Property
Gifting of property is done under Section 122 of the Transfer of Property Act. It refers to gifting as: “…the transfer of certain existing moveable or immoveable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee. Such acceptance must be made during the lifetime of the donor and while he is still capable of giving, If the donee dies before acceptance, the gift is void.”
The purpose of gifting a property is gratuitous. The word “voluntarily” mentioned in the statement refers to unfettered will. This voluntary move combined with the absence of consideration or its expectation forms the key component of gift.
Benefits to choose service
Although you are gifting your property to somebody, it still needs to go through a proper legal discourse. Also, mere gifting is not enough. You must transfer the ownership from your name to the gift recipient’s (donee’s) name. Taking the help of legal service is a wise choice, as the lawyer will guide you in each step of creating the Gift Deed and doing everything correctly so that there are no legal issues in the future.
Frequently Asked Questions (FAQs)
No. One important factor in gifting of property is that the property must be in existence. Section 124 talks of gifting of future property. It states that “A gift comprising of both existing and future property is void as to the latter.”
This means that the property to be gifted must exist in the present time while you are making the Gift Deed, even if it may be transferred to the new owner in the future. This clearly implies that the gift of a future property is invalid and that gifting a future property is just a promise and cannot be considered a deed.
A Gift Deed, once made, cannot be revoked. However, in exceptional cases, it is possible to revoke the gift under Section 126 of Transfer of Property Act, 1882, in two circumstances. One is when there is mutual consent of the donor and the donee for revoking the gift. The other is by rescinding the contract made between the donor and the donee.
.
Yes. There should be a minimum of two witnesses on the donor’s side while signing of the Gift Deed.
Anybody who is the owner of the property to be gifted can gift it to the other, except minors. A donor who is a minor cannot make a Gift Deed. If the donee is a minor or is insane, then his/her natural guardian such as father, father’s executor, paternal grandfather or his executor, can accept the gift on the minor’s or insane’s behalf. Once the donee becomes an adult, he/she should either accept or return the gift.
As per a new provision in the Income Tax Act, 1961, enacted from the Financial Year 2004-05, gift received in the following circumstances is not taxable:
- Receiving a gift from a blood relative/relative
- Receiving a gift on the occasion of marriage
- Receiving a gift under inheritance or will
- Gift received from an authority like Panchayat, Municipality, education institution, fund, foundation, religious trust, hospital, charity, or any other registered body
- When any such registered body receives a gift from a person
- When HUF (Hindu Undivided Family) members receive gift from HUF members on occasion of capital distribution or total/partial partition
When a trust receives a gift from a person