A Gift Deed is defined under section 122 of the Transfer of Property Act, 1882. As per the provisions, any immovable property can be transferred through a Gift Deed. A gift deed is similar to a sale deed except that no money is paid in the transfer of the property. Like a sale deed, a gift deed too, has to be registered with the sub registrar under section 17 of the Registration Act, 1908, and as per section 123 of the Transfer of Property Act, failing which would render the contract invalid. Registering a gift deed gives it a legal status and establishes the ownership of the property. It also proves that all applicable government dues have been paid. A gift deed cannot be revoked unless there is an agreement between the contracting parties stating that the gift can be revoked on the occurrence of a certain event. Hence isn’t it advised to add a clause of revocation while executing a gift deed in order to avoid glitches? Section 126 of the Transfer of Property Act provides for situations wherein a gift deed may be revoked by the donor.
Section 56 (2) (vii) of the Income Tax Act, 1961, states that a gift is not taxable if it is received by an individual or Hindu undivided family from any blood relative or as inheritance or at the time of marriage or in contemplation of death. But in any other context, if the aggregate of gifts received exceeds Rs 50,000 in a year, then the gift will be taxable as income from other sources. Also, while registering the gift deed different states have different charges on stamp duty. Therefore it is a must that one checks the law of the state with regard to the gift deed, and then proceed towards the registration.