Diving into Gift Deed for Real Estate: An Overview for Property Investors

By LODHA

There are indeed as many kinds of real estate transactions as there are properties. Each real estate transaction differs from another in terms of the property in question and how it is being transferred between parties. One of the more popular ways of transferring immovable property is via a gift deed. If you're unfamiliar, a gift deed is an agreement that allows a person to bestow his/her property or money to another as a gift. Two important points to note about a gift deed are that you can execute it for both movable and immovable property and any transfer it facilitates is voluntary. If you execute a gift deed, it is crucial to get it registered since it acts as evidence in case any future dispute arises and is a tool that delineates succession. However, a gift deed must be registered and comes with stamp duty implications. If you want to learn more about gift deed stamp duty and registration charges, our explainer comprises everything you need to know.

Understanding Gift Deed's Stamp Duty as Per States 

In India, the gift deed format outlines the legal framework for transferring ownership of a property or asset as a gift between parties. Whenever you register a legal document, especially concerning property, you have to pay a tax called stamp duty that varies from one state to another. Here's what the stamp duty on gift deeds in each state is in 2024:

Source 

As is obvious from the table, the stamp duty charges for git deeds range between 2%-7%, regardless of the state where you get it registered. In many states, stamp duty on gift deeds in blood relations is waived off or levied at a concessional rate. For instance, in Maharashtra, if a person gifts residential or agricultural land to their spouse, children, grandchildren or son's widow, the gift of property stamp duty will be a maximum of Rs 200.

Calculating Stamp Duty on a Gift Deed

Knowing the rate levied by your state is only the first step in calculating stamp duty charges for a gift deed. To accurately calculate property gift deed charges, you need to apply the rate levied by your state to the value of the said property. It is also important to remember that the stamp duty on a deed of gift property is paid by the giver/donor and not the receiver/donee. If the receiver were to pay stamp duty, the transfer would not be deemed as a gift and would count as a sale.

For instance, in Maharashtra, the stamp duty percentage is 3%, and suppose the property total cost is 1 Crore. So, the stamp duty will be 3% of 1 Crore, which is 30 Lakhs. This is to be paid for registering the gift deed.

Legal Mandates Related to Gift Deeds

As per the provisions of the Transfer of Property Act, you must get a gift deed registered. Either you or someone acting on your behalf must sign the registration document and two witnesses have to attest to the same. Speaking plainly, you cannot simply gift a property without completing the legal procedure. When you go to register your gift deed, the registrar will also ensure that the correct stamp duty is affixed to the document when you present it for registration. Apart from stamp duty, you also must pay registration charges associated with a gift deed. As far as gift deed registration charges are concerned, most states levy a rate of 1% of the property cost. However, certain states levy a standard fee as registration charges for gift deeds.

A gift is one of the more hassle-free ways of transferring property, especially if you're working with a tight time frame. Gift deeds come into effect immediately, helping you transfer the property quickly. Additionally, you can execute gift deeds easily to ensure that you have proof of transfer and ownership in case any legal disputes arise.