Property Gift Deeds in India: Are They Legally Binding?
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In Indian families, gifting property to children or relatives is a common practice. But many people don’t realize that a gift deed is not as casual as handing over the keys.
Is a property gift deed legally binding? And what makes it valid in the eyes of Indian law? Let’s break it down step-by-step.
What Is a Property Gift Deed?
A gift deed is a legal document used to transfer ownership of property voluntarily from one person (the donor) to another (the donee) without any monetary exchange.
This transfer must be:
- Made out of love and affection
- Accepted by the donee during the donor’s lifetime
- Registered with the sub-registrar of assurances
It is governed by the Transfer of Property Act, 1882 and the Registration Act, 1908.
Is a Gift Deed Legally Valid in India?
Yes — but only if it meets the following conditions:
- The deed must be in writing
- It must clearly describe the property
- It must be signed by the donor and attested by two witnesses
- It must be registered with the local registrar office
Unregistered gift deeds, especially involving immovable property, are not legally valid in court. You cannot claim ownership based on an unregistered gift deed.
Also, unlike a will (which becomes effective after death), a gift deed is immediately enforceable.
Gift Deed vs. Will: What’s Better for Property Transfer?
Both gift deeds and wills are used for transferring property — but they operate differently.
| Gift Deed |
Will |
| Comes into effect immediately |
Only after death of the testator |
| Irrevocable once registered |
Can be changed any time |
| Needs registration |
Registration is optional |
| Subject to stamp duty |
Minimal or no stamp duty |
If you're gifting property during your lifetime and want no disputes later, a gift deed is often preferred. But it must be done properly.
Can a Gift Deed Be Cancelled?
Generally, gift deeds are irrevocable unless:
- The gift deed itself includes a revocation clause
- The gift was obtained through fraud or coercion
- The donee fails to meet any condition agreed upon
If the donee (recipient) mistreats the donor or violates a specific condition in the deed, the donor may approach a civil court to cancel the gift.
For more, read: Challenging a Fraudulent Property Document in India
Tax Implications of Gifted Property
Under the Income Tax Act, 1961:
- Gifts received from close relatives (parents, siblings, spouse) are not taxable
- Gifts from non-relatives above ₹50,000 may be taxed as income
- Stamp duty is applicable, and varies by state (some offer discounts for women recipients)
Also, capital gains tax doesn’t apply to the donor at the time of gifting, but applies to the donee if they later sell the property.
Risks and Precautions Before Gifting Property
While gift deeds can be useful, they must be handled with caution. Here’s why:
- Once gifted, the property is no longer yours — even if the recipient turns hostile
- Unregistered or orally agreed gifts have no legal standing
- Fraudulent relatives may misuse elderly donors’ trust
Here’s a real-world warning: What Happens When Two Siblings Claim the Same Inherited Property?
So before you gift property, consult a lawyer, draft a proper deed, and register it legally.
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Conclusion: A Powerful Tool — If Done Right
A gift deed can simplify property transfer and avoid future disputes — but only when executed with care. It is a binding, irreversible decision with legal and financial consequences.
Make sure you understand the implications, register it properly, and always seek legal advice before gifting any high-value asset like real estate.
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