Understanding Stamp Duty on Gift Deed in India

A gift deed is a legalised document that allows you to transfer property ownership without paying any money. The person who transfers ownership is known as a “Donor,” while the person who receives ownership is known as a “Donee.” A gift deed can only be legitimate if it has been officially registered and the gift deed stamp duty and registration charges for the gift deed have been paid. If you wonder how much stamp duty is on gift deed, this post will explain the many features of gift deed stamp duty, gift deed registration fee, and their rates.

Understanding Stamp Duty on Gift Deed

Gifting is the act of a person willingly transferring certain or all of his rights in an asset he owns to another person for no monetary payment. Given that they do not profit from the transfer of ownership of the property, it may appear strange that a donor is asked to pay a charge to have his property transferred to someone else. Although giving a house is not a typical transaction, it has income tax and stamp duty implications. In India, gift deed stamp duty differs from state to state and can range from 2% to 7% of the property value.

Gift Deed Stamp Duty in 2023

Please note that these are just the general rates of stamp duty. The actual rates may vary depending on the specific state and the circumstances of the gift. It is always best to consult with a lawyer or a property expert to get accurate information about the stamp duty applicable in your case.

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Bursting Gift Deed Myths: 

Owners who offer their property as a gift should know that they lose ownership of the transferred item once the gift deed is recorded. This is because the terms of a gift deed, like a sale or a relinquishment document, take effect immediately. This is not the scenario with a Will whose provisions only take effect when Will's maker has died. Remember, however, that a gift deed is only valid until the stamp duty on the gift deed has been paid.

What Property Can Be Gifted?

Any immovable property that satisfies the requirements of Section 122 of the Transfer of Property Act, 1882, may be transferred via a gift deed. A gift tax on immovable property in India must be recorded with the sub-registrar office in accordance with sections 123 of the Transfer of Property Act and 17 of the Registration Act of 1908, just like a sale deed, with the exception that no money is exchanged in the transfer of the property. The contract would be void if this wasn't done.

Income Tax on Gift Deed

The topic of whether gifts are taxable is one that taxpayers ask themselves frequently and on a regular basis. You can learn about various provisions relating to the taxability of gifts received by a person or a Hindu Undivided Family (HUF) in this section. A gift is any money or property that is given to an individual or a HUF without asking for it or in situations where the property is acquired for too little money.

From the perspective of taxation, gifts can be categorised as follows:

1. A "monetary gift" is any sum of money that is given without expecting anything in return.

2. "Gift of moveable property" refers to specific movable item acquired without payment.

3. "Movable property received for less than its fair market value" refers to certain movable properties that were acquired at a discount (or for insufficient compensation).

4. Immovable property acquired in exchange for nothing is known as "gift of immovable property."

5. "Immovable property received for less than its stamp duty value" refers to real estate that was purchased for less money than it was worth.

Any amount of money received by an individual or HUF without consideration (i.e., a monetary gift received in cash, check, draught, etc.) will be subject to tax if the following criteria are met:

• Monetary amount received heedlessly.
• The total amount of money received in this manner during the year reaches Rs. 50,000.

Even though the gift-related laws apply to everyone, it has been reported that presents from residents to non-residents are said to not be subject to Indian taxation because the income does not accrue or arise there. The Finance (No. 2) Act, 2019 added a new clause (viii) under Section 9 of the Income-tax Act, stating that any income arising outside India, defined as money paid without consideration on or after 05-07-2019 by a person who lives in India to a non-resident or a foreign company, shall be deemed to accrue or arise in India. This was done to ensure that such gifts made by residents to a non-resident person are subject to tax in India.

5 Steps And Tips to Execute a Gift Deed

The process for registering a gift deed

The steps to execute the gift deed are as follows:-

1. A licenced expert will assess the real estate covered by the donation deed.
2. Both the giver and the donee must sign a gift deed in front of two witnesses.
3. To deliver the signed documents, make your way to the closest sub-registrar.
4. For the computation of the gift deed registration fees, including stamp duty, use a lawyer. The fees specified must be paid.
5. Get the deed attested

Stamp Duty on Gift Deed in Delhi Rates and Legal Requirements for Gift Deed

The Registration Act of 1908, which governs all deeds states that gift deed stamp duty in Delhi must be registered. 

• A qualified appraiser must appraise the property to be gifted.
• If the Donee is a woman, stamp duty in Delhi on gift deed will be 4 percent of the property's worth and 6 percent if the Donee is a man.
• The registration price will be 1% of the whole amount plus Rs.100/- in pasting fees. 
• Registration applications must be submitted to the district's concerned Sub Registrar office. The average response time is 15 days.

What is the Stamp Duty on Gift Deed in Maharashtra? 

The stamp duty on gift deed in Maharashtra is 3% of the property’s worth, according to Article 34 of the Maharashtra Stamp Act, responsible for the property gift deed rules which was revised in 2017. The gift deed stamp duty on gifted property is Rs 200 if the property in question is a residential or agricultural property gifted (without payment) to family members. 

Stamp Duty on Gift Deed in AP

The registration fee for a gift deed in Andhra Pradesh is 0.5 percent, with a maximum of Rs 10,000.

Stamp duty On Gift Deed of Commercial Property in Maharashtra

There are no exemptions from Stamp Duty and Registration Fees when it comes to commercial property. The Stamp Duty and Registration fees will be the same as the Sale / Conveyance Deed. If the property is in Maharashtra, for example, there will be 5% Stamp Duty + 1% LBT + 1% Registration Fees. These fees will be calculated based on the property's Government Value.

Stamp Duty on Cash Gift Deed in Maharashtra

A cash gift deed is an agreement in which the donor (the person who pays the money) can give money to the Donee (the person who receives the money) without any other compensation or exchange. It depicts a donation of cash given voluntarily by one person to another. This deed details the amount of money to be transferred and any gift restrictions. . The rate of stamp duty for gift deed in Maharashtra for cash is 3%.

Stamp Duty on Gift Deed for Cash in Delhi

Because it records the act of providing a gift, a gift deed for cash is an important document, especially when gifting a significant sum of money. The stamp paper value for cash gift deed creates a legally binding document. A gift deed ensures proof of such transfer for both the donor and the Donee, avoiding future misunderstandings and misuse. The rate is 4%.

Stamp Duty on Gift Deed in Blood Relation

When it comes to stamp duty on gift deed in blood relation Maharashtra, immovable property, such as lands, a house, or an apartment, can now be passed down to one’s children or blood relatives without having to pay stamp duty. On March 25, 2015, Hon'ble Revenue Minister Eknath Khadase informed the Govt in the Assembly. As a result, stamp duty on the transfer of lands or flat immovable property to family members is waived.

He declared that immovable property, such as land, a house, or a flat, can now be transferred to the owner’s children or even blood relations merely by signing a transfer deed on Rs. 500/- stamp paper and paying no stamp duty on gift deed. Families of transferors will be relieved by this announcement, as they will no longer be required to pay 5% stamp duty at market value as per ready Reckoner. The minister stated that a transfer document executed on Rs. 500/- stamp-paper will suffice in such a case. Therefore, no stamp duty for gift deed in Maharashtra for blood relations. 

Stamp Duty on Gift Deed in Delhi in Blood Relation

Every state in India has a varied and regulated percentage of stamp duty that must be paid when a gift deed is registered. A gift deed's stamp duty is usually less than a sale deed, although it is computed as a conveyance rather than a sale deed. The requirements for levying stamp duty on a gift deed differ by state. For example, gift deed stamp duty in Delhi is different for males and females, as it is levied at 5% and 3%, respectively.

Stamp Duty on Gift Deed in Blood Relation in Haryana

In Punjab and Haryana, a gift of immovable property to a blood relative is exempt from stamp duty. Parents, children, grandchildren, sisters, and spouses would all be eligible for the exemption as per the transfer of property from parent to child in India guidelines. The stamp duty on gift deed between brothers would follow the same.

Stamp Duty on Gift Deed from Father to Son

The stamp duty on gift deeds is the same as on a regular sale. There is an exception in the case of certain relatives, such as gifts from father to son. Until May 16, 2017, the rate of stamp duty on such a transaction in Maharashtra was restricted to Rs 200. In some states, the stamp duty will now be 3% of the transaction's market value, whereas, in others, there will be no tax at all.

Stamp Duty on Gift Deed from Husband to Wife

To protect their interests, one spouse would be entitled to transfer immovable property to the other spouse, and stamp duty would not be an obstacle to property transfer. This step will go a long way toward protecting the spouse's interests in difficult family situations or medical situations. Thus, there is no stamp duty on gift deed applicable here.

How do You Calculate Stamp Duty on a Gift Deed?

Because stamp duty on gift deeds must be paid as a proportion of the property value, the computation would be based on each state's percentage levied on gift deed registrations. For example, in the state of Uttar Pradesh, the gift recipient must pay a stamp duty of 2% of the present value. If the gifted property has a declared worth of Rs 1 crore, the person receiving it will have to pay Rs 20 lakh in stamp duty on the gift deed.

Is it Possible to Reclaim the Property You were Given?

A gift can be returned; however, this must be considered and included in the recorded gift deed. Revocation of the agreement is not feasible under Section 126 of the Transfer of Property Act unless the donor indicates that he retains the right to reclaim the gift in the registered contract. This means that the donor must clearly state while drafting the gift deed that even after the gift deed is performed, the donor retains the right to withdraw the gift deed and restore the gift from the Donee if and when he so desires.

How Can NoBroker Help?

The transfer of a dwelling property under a gift must be completed by a registered instrument/document signed by or on behalf of the individual gifting the property and attested by at least two witnesses, according to the Transfer of Property Act and paying stamp duty on gift deed. If you need help from a professional tax and financial consultant then you will certainly find great options on Nobroker. Please leave a comment below this article; our executive will be in touch with you soon.

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