A gift deed is a legal document used to transfer ownership of property or assets from one person to another without any monetary exchange. It is commonly used for family arrangements where property is given out of love and goodwill. In property matters, a gift deed helps ensure that the transfer is clear, voluntary, and legally valid. According to Section 123 of the Transfer of Property Act, 1882, a gift deed takes effect immediately upon registration.
Key Takeaways
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Proper drafting and registration are essential to ensure legal validity and avoid future disputes.
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Stamp duty rates on gift deeds vary across states, and concessional rates apply for specified family members in many states.
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Tax treatment and exemptions are governed under Section 56(2)(x) of the Income Tax Act and depend on donor–donee relationship and value.
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Compared to a will, a gift deed takes effect during the donor’s lifetime and offers greater certainty in property transfer.
What is a gift deed?
A gift deed is a legal document that allows a person to voluntarily transfer ownership of property or assets to another person without receiving any payment in return. In simple terms, what is a gift deed can be understood as a lawful way to gift movable or immovable property during the lifetime of the owner. The person giving the gift is called the donor, and the recipient is known as the donee. Registration is mandatory for immovable property under Section 17 of the Registration Act, 1908.
The legal importance of a gift deed lies in the clarity and certainty it provides in property transfer. Once a gift deed is properly drafted, acce pted by the donee, and registered as required by law, ownership is transferred immediately and lawfully. This helps prevent future disputes, especially in family property matters.
A registered gift deed also serves as strong legal proof of ownership and is recognised by courts and authorities. Because of this, gift deeds are widely used for smooth and transparent property transfers.
Gift deed registration process
The gift deed registration process ensures that the transfer of property is legally valid and enforceable. Below is a simple step-by-step explanation of how registration is completed.
Step 1: Drafting the gift deed
The process begins with drafting the gift deed. The document must clearly mention details of the donor, donee, relationship between them, and complete property description. It should also state that the transfer is voluntary and without consideration.
Step 2: Stamp duty payment
Stamp duty must be paid before registration, and the rates vary by state, property type, and relationship between parties. Many states offer concessional rates for gifting to blood relatives (as of January 2026).
Example state-wise rates (Indicative as of January 2026):
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State |
Concessional Gift to Family |
Regular Gift Deed |
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Maharashtra |
₹200 flat for defined family members |
Up to 5% of market value |
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Delhi |
2% for women, 3% for men when gifted to family |
Up to 6% |
|
Uttar Pradesh |
₹5,000 cap for agricultural/commercial/residential to family |
Up to 7% |
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Karnataka |
₹1,000 stamp + 1% registration for family |
5% stamp + 1% registration |
Step 3: Visit to sub-registrar office
Both the donor and donee must visit the sub-registrar office under whose jurisdiction the property is located. This visit is mandatory for immovable property transfers.
Step 4: Execution and witness attestation
The gift deed is signed by the donor and donee in the presence of the registering officer. Two witnesses must also sign the document to confirm the transaction.
Step 5: Verification and registration
The sub-registrar verifies identities, documents, and stamp duty payment. Once verified, the deed is officially registered.
Step 6: Receipt of registered deed
After completion, a registered copy of the gift deed is issued. This serves as legal proof of ownership transfer.
Types of properties that can be gifted
A gift deed can be used to transfer different types of assets, depending on whether the property is movable or immovable. The nature of the property determines the documentation and registration requirements.
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Movable property
Movable property includes assets that can be transferred without changing their nature or location. This category covers items such as cash, jewellery, shares, securities, and other valuable possessions.
A gift deed for movable property does not always require registration, but the transfer must be voluntary and accepted by the donee. Proper documentation helps establish ownership and avoid disputes.
Note: Registration for movable gifts is optional, but documented delivery and acceptance are recommended for tax and ownership proof.
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Immovable property
Immovable property refers to assets that are permanently attached to land. This includes residential houses, flats, plots, agricultural land, and commercial properties.
When immovable property is gifted, registration of the gift deed is mandatory under law. Ownership is transferred only after the deed is registered at the sub-registrar’s office.
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Non-property gifts
Apart from physical assets, certain legally transferable rights or interests may also be gifted. These must be existing and legally owned by the donor at the time of transfer. Future or uncertain assets cannot be gifted.
Understanding the type of property being gifted helps ensure the gift deed is executed and registered correctly.
Also Read: What is Share?
How to draft a legally binding gift deed?
Drafting a gift deed requires clarity, accuracy, and compliance with legal requirements to ensure the transfer is valid and enforceable.
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Step 1: Mention basic details
Begin by clearly stating the date and place of execution. Include full details of the donor and donee, such as names, addresses, and their relationship.
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Step 2: Describe the property
Provide complete and accurate details of the property being gifted. This includes location, boundaries, identification numbers, and nature of the property, whether movable or immovable.
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Step 3: Declare voluntary transfer
The deed must clearly state that the gift is made voluntarily, without any pressure or monetary consideration. This confirms the donor’s intent.
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Step 4: Acceptance by the donee
Mention that the donee has willingly accepted the gift during the donor’s lifetime. This is essential for validity.
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Step 5: Include witness details
The gift deed must be signed by the donor and donee in the presence of at least two witnesses. Their names, addresses, and signatures should be included.
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Step 6: Execute on stamp paper and register
Print the deed on appropriate stamp paper and complete registration at the sub-registrar’s office if required. A carefully drafted gift deed helps avoid future disputes and ensures smooth ownership transfer.
What are the rules for gift deeds?
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A gift deed must be executed voluntarily. The donor should transfer the property voluntarily, without pressure, force, or undue influence. Any coercion can invalidate the deed.
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The property being gifted must be an existing and legally transferable asset. Future or uncertain property cannot be gifted under a valid gift deed.
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The donor must have a clear and lawful title over the property. If ownership is disputed or unclear, the gift deed may be challenged later.
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The donee's acceptance of the gift is mandatory. The donee must accept the gift during the donor's lifetime for the transfer to be legally complete.
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There must be no monetary consideration involved. If money or any form of payment is exchanged, the transaction will not qualify as a gift.
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For immovable property, registration of the gift deed is compulsory under law. An unregistered gift deed is invalid.
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Both the donor and donee should be legally competent to enter into the transaction, meaning they must be adults and capable of understanding the transfer.
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Common issues arise due to improper drafting, lack of registration, unclear property details, or disputes over acceptance, which can lead to legal complications later.
Advantages of a gift deed
A gift deed offers several benefits when transferring property or assets, especially in family and succession-related matters.
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Legal transfer of ownership: A gift deed enables a clear, lawful transfer of property without monetary exchange. Once registered, ownership passes to the donee immediately.
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Prevention of future disputes: Since the transfer is documented and legally recorded, a gift deed helps reduce the risk of disputes or claims from other parties.
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Effective succession planning: Using a gift deed allows the donor to distribute property during their lifetime. This helps in planned asset distribution and avoids uncertainty after death.
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Immediate ownership transfer: Unlike a will, a gift deed becomes effective upon execution and registration. The donee gains ownership rights without delay.
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Lower transfer costs in some states: Many states offer concessional stamp duty rates for gifting property to close family members. This can reduce the overall cost of property transfer.
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Strong legal proof: A registered gift deed serves as valid legal evidence of ownership transfer. It is recognised by courts and government authorities.
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Emotional and personal value: Beyond legal benefits, a gift deed reflects the donor’s intent and goodwill, making it a meaningful way to transfer assets to loved ones.
How to cancel the gift deed?
Under Section 126 of the Transfer of Property Act, 1882, a gift deed can be cancelled or revoked only under specific legal conditions. Once a gift deed is executed and registered, it is generally irrevocable unless these conditions are met.
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Mutual agreement - The donor and the donee must mutually agree to cancel the gift deed. This agreement should be properly documented and registered to be legally valid.
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Revocation clause in the gift deed - If the original gift deed contains a revocation clause, the donor can revoke the gift by fulfilling the conditions set out in that clause. Without such a clause, revocation becomes difficult.
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Fraud, coercion, or undue influence - A gift deed can be cancelled if it was executed by fraud, duress, misrepresentation, or undue influence. The donor must prove these grounds before a court.
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Failure of conditions - If the gift was made subject to certain conditions and the donee fails to fulfil them, the donor may seek revocation of the gift deed.
The cancellation process usually involves filing a petition before a civil court, submitting evidence, and obtaining a court order. Once approved, the cancellation must be recorded with the sub-registrar to update property records.
What are tax exemptions on property as a gift
Tax treatment of property received through a gift deed for property transfer depends on the relationship between the donor and the donee, the value of the property, and the purpose of the gift, as per applicable tax laws.
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Gifts received from specified relatives - Property received as a gift from specified relatives is fully exempt from tax, irrespective of its market value. Specified relatives include parents, spouse, siblings, children, grandparents, and other close family members as defined under tax laws.
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Gifts received on special occasions - Property received on certain occasions, such as marriage,e is exempt from tax in the hands of the recipient. This exemption applies regardless of the property’s value, provided the gift is received on the occasion of marriage.
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Inheritance and gifts under a will - Property received through inheritance or under a will is not treated as taxable income. Since the transfer occurs by operation of law, it does not attract tax at the time of receipt.
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Value-based exemption limit -If property is received from non-relatives and the total value of gifts exceeds ₹50,000 in a financial year, the entire value becomes taxable. If the value is within this limit, it remains exempt.
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Agricultural land and charitable transfers - Gifts of agricultural land within family members or property donated to approved charitable institutions may qualify for tax exemptions, subject to prescribed conditions. Tax provisions should always be checked based on the latest rules applicable at the time of transfer.
Difference between a gift deed and a will
A gift deed is a legal document used to transfer ownership of property or assets from a donor to a donee during the donor’s lifetime, without any exchange of money. Once a gift deed is executed and registered, the transfer takes effect immediately.
A will, on the other hand, is a legal document that states how a person’s assets should be distributed after their death. Unlike a gift deed, a will has no legal effect during the lifetime of the person making it and can be changed or revoked at any time before death.
The key difference between a gift deed vs will lies in the timing and certainty of ownership transfer.
Timing of transfer
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Gift deed: Ownership is transferred immediately after execution and registration.
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Will: Ownership is transferred only after the death of the person making the will.
Revocability
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Gift deed: Generally irrevocable once registered, except under specific legal conditions.
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Will: Can be modified or cancelled any number of times during the person’s lifetime.
Legal certaint
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Gift deed: Provides immediate legal proof of ownership and reduces future disputes.
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Will: May be challenged after death, which can delay asset distribution.
Registration requirement
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Gift deed: Registration is mandatory for immovable property.
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Will: Registration is optional, though recommended for clarity.
Both serve different purposes, depending on when and how ownership is intended to be transferred.
Conclusion
A gift deed is a legally recognised method for transferring ownership without monetary consideration. Understanding what a Gift Deed helps clarify how assets can be passed on smoothly during one’s lifetime. A clear gift deed example shows the importance of proper drafting, applicable gift deed charges, and correct gift deed form.
