Gift Deed 556ly
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GIFTDEED Definition of Gift. Gift is the transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person called the donor, to another, called the donee, and accepted by or on behalf of the donee. Acceptance when to be made Such acceptance may be made during the lifetime of the donor, and while he is still capable of giving. If the donee dies before acceptance, the gift is void. Transfer how effected. For the purpose of making a gift of immovable property, the transfer must be effected by a ed instrument signed by or on behalf of the donor, and attested by at least two witnesses. For the purpose of making a gift of movable property, the transfer may be effected either by a ed instrument signed as aforesaid or by delivery. Such delivery may be made in the same way as goods sold may be delivered. Gift of existing and future property. A gift comprising both existing and future property is void as to the latter. Gift to several, of whom one does not accept. A gift of a thing to two or more donees of whom one does not accept it is void as to the interest which he would have taken had he accepted. When gift may be suspended or revoked. The donor and donee may agree that on the happening of any specified extent, which does not depend on the will of the donor, a gift may be suspended or revoked; but a gift which the parties agree shall be revocable wholly or in part, at the mere will of the donor, is void wholly or in part, as the case may be. A gift may also be revoked in any of the cases (save want or failure of consideration) in which, if it were a contract, it might be rescinded. Save as aforesaid, a gift cannot be revoked. Nothing herein contained shall be deemed to affect the rights of transferees for consideration without notice. Registration of Documents Q 1 How ownership of immovable property is acquired by a person? Ans A person may acquire immovable property in any of the following way (i) By inheritance of ancestral property. (ii) Through will. (iii) Acquisition by oneself such as purchase etc. (iv) Through gift, trust, settlement deeds.
(v) Grant, sanad / Inam by the Government Through decree of Court. There are two ways of acquisition: 1.By act of parties. Example: Purchase, gift etc. 2. By operation of law Example: Inheritance, decree of Court etc. (for details please see Transfer of Property Act, 1882 (Central Act)) Q 2 Is it necessary to in Office of the Sub Registrar to get khata transferred in respect of property acquired by inheritance? Ans Not necessary. After the death of owner of a property his heirs, such as wife, children i.e. male and female, married or unmarried may get the Khata transferred on production of death certificate of the owner with details of property held by him to the following officers. If property is an agricultural land - Tahasildar (See Sec.128 of Karnataka Land Revenue Act, 1964) Offices of Corporation, Municipality, Panchayat or City survey if such office exists. Q 3 Which are the documents requires to be compulsorily ed? Ans 1. Gift deed of immovable property. 2. Other non-testamentary instruments, which purport or Operate to create, declare, assign, limit or extinguish whether in the present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property; 3. Non testamentary instruments which acknowledge the receipt or payment of any consideration on of the creation, declaration, assignment, limitation or extension of any such right, title or interest; 4. Leases of immovable property from year or for any term exceeding one year, or reserving a yearly rent; 5. Non testamentary instruments transferring or asg any decree or order of a court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extinguish whether in the present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property; 6. The documents containing contracts to transfer for consideration, any immovable property for the purpose of section 53A of the Transfer of Property Act, 1882 shall be ed if they have been executed on or after the commencement of the Registration and Other Related Laws (Amendment) Act, 2000 and if such documents are not ed on or after such commencement, then, they shall have no effect for the purposes of the said section 53A Q 4 How to effect partition of .property? Ans a. If all the parties have share (common right) in the property partition can be effected. If partition is effected through an instrument such instrument must be compulsorily ed. b. Oral partition affected through memorandum submitted to the concerned authorities need not be ed.
c. Stamp duty has to be paid in respect any kind of partition whether it is to be compulsorily ed or not. d. Parties to the partition may agree to effect partition of unequal shares. Q 5 When there are two or more heirs, can one or two be made full owners by others taking money in lieu of their share? Ans a) Yes. Any of the co-owners can individually or collectively release his / their right in favour of one or more collectively as the case may be and make him / them full owner. This kind of release can be with or without payment of money. This document is called Release. b) Release can be made not only in case of inherited property but also in case of t purchase/acquisition. Q 6 What is a will? Ans A testamentary document by which a person bequeaths his property to be effective on his death is a will. The property will devolve on the person in whose favour it is bequeathed after death of testator. Q 7 Who can execute a will? Ans a) Any person above the age of 18 years and mentally sound may execute will, but will caused by fraud or coercion or by importunately will not be valid. Therefore a will must be executed voluntarily. b) Parents or guardians cannot execute will on behalf of minors or lunatics. c) Attestation by minimum two witnesses is necessary. d) Scribe (deed writer / advocate) cannot be called witness. Two independent attesting witnesses other than the scribe or necessary. e) Beneficiary under a will should not sign as attesting witness. In order to avoid disputes in implementation of a will, description of property and the beneficiaries should be clearly be written without giving room for any doubt. Q 8 Is it compulsory to a will? Ans It is not compulsory to . Executants may at his option. It is better to the will. If original is lost a certified copy can be obtained from SubRegistrar Office. Q 9 Where can the will be ed? Ans It can be ed in any office of the Sub Registrar in India Q 10 Is there any time limit to a will? Ans There is no such time limit Q 11 Can a will be cancelled? Ans The testator can cancel his will at anytime during his lifetime. Such cancellation deed requires a Stamp duty of Rs.100-00 Q 12 Can a ed will be rectified or changed? Ans If executant of a will wishes to rectify, add to will may do so during his lifetime. This is called codicil. This document does not require stamp duty.
Q 13 Can a will be ed even after death of testator? Ans Yes, claiming party under the will have to produce will, records relating to the death of the testator, witness and the scribe before the Sub Registrar. If Sub Registrar is satisfied about the truth and genuineness of the execution of the will, he will . Q 14 What is the Stamp duty and Registration fee to a will? Ans There is no Stamp duty on will deed. For registration of will during the life time of the testator Rs.200-00 Registration fee prescribed. To the will after the death of the testator Registration fee of Rs.200-00 and enquiry fee of Rs.250-00 is prescribed. Q 15 Is the certified copy of a ed will available to any body? Ans A certified copy of a ed will is available to the testator only during his lifetime. After his death anybody can obtain after producing proof of death of testator. Q 16 How to keep contents of a will confidential? Ans Will can be deposited in a sealed cover in office of the District Registrar. A fee of Rs.1000-00 prescribed to deposit will in a sealed cover. Depositor or authorized person (executor) can withdraw the sealed cover containing a will, if desires to do so. A Registration of Rs.200-00 prescribed. Q 17 What is the procedure to obtain the sealed cover containing a will after the death of the depositor? Ans On making an application along with proof of the death of the depositor, District Registrar will open sealed cover in the presence of the applicant and it will be ed. Certified copy will be issued if desired. A fee of Rs.100-00 prescribed to open a sealed cover. Q 18 What is the procedure for change of khata of the properties obtained through will? Ans After the death of the testator person claiming through the will have to apply to the concerned authorities as explained in question no.2 along with the copy of the will and death proof. Q 19 What are the duties and liabilities of buyers and sellers while purchasing a property? Ans Following is the duties and liabilities of buyers and sellers Before sale Liabilities of seller Liabilities of purchaser To inform defects in the property To provide records of right To execute sale deed Payment of consideration To pay of the liabilities on the property Rights Rights of seller Rights of buyer To get rent and profits Right of encumbrance on consideration already paid After completion of sale
Liabilities of seller Liabilities of purchaser To hand over possession Liability on accidental or loss to the property Information about right To hand over records of rights after receipt of consideration Duty to pay taxes and liabilities after taking possession of property Rights of seller Rights of buyer If consideration is due encumbrance on property of such dues Incremental value/profit on property Though there are rights and duties the purchaser should carefully examine the following matters; 1) Original documents. 2) How did the seller acquire the property. 3) Encumbrance Certificate of the property for a minimum period of 15 years from Sub Registry Office to know if there are any encumbrances on the property to be purchased. 4) from the concerned court if there are any litigations on the property to be purchased. 5) if there are any litigations, objections in revenue, municipal offices about inheritance or any other matter. 6) If seller is a power of attorney holder, it should be verified from the principal and if such power of attorney is genuine and whether it is still in force. 7) It should be verified whether the transaction is opposed to public policy under Section 22A of the Registration Act, 1908. If so the document will not be ed. 8) If the Property is a granted land to the member of scheduled caste and scheduled tribe, it should be verified if the transaction is in contravention of the and conditions of grant and whether permission of the Government is obtained for transfer. Q 20 What are the transactions opposed to public policy? Ans Government has declared the following as opposed to public policy under Section 22A of Registration Act, 1908 namely,(1) (a) Agreement to sell, sale, gift, exchange, mortgage, lease or assignment of land of which the occupancy right has been granted under Chapter III of the Karnataka Land Reforms Act, 1961 in contravention of the restrictions imposed under section 61 of the said act and the rules framed there under. (b) Agreement to sell, sale, gift, exchange or otherwise of any land in excess of the ceiling limit specified in section 63 or 64 of the Karnataka Land Reforms Act, 1961 in contravention of section 74 of the said act and the rules framed there under. (c) Agreement to sell, sale, lease, mortgage with possession or otherwise of any agricultural lands to a person or a family or a t family who or which has an assured annual income of rupees Two lakhs and above from sources other than agriculture in contravention of section 79-A of the Karnataka Land Reforms Act, 1961 and the rules framed there under. (d) Agreement to sell, sale, lease, mortgage with possession or otherwise of any agricultural land to an educational, religious, charitable institution society, trust, company, association, other body of individuals or a co-operative Society other than the co-operative farming society in contravention of section 79-B of the Karnataka Land Reforms Act, 1961 subject to the exceptions and exemptions provided under section 109 of the said act and the rules framed there under.
(e) Agreement to sell, sale, gift, lease, mortgage with possession or otherwise of any agricultural land granted under the Karnataka Land Grant Rules, 1969 subject to restrictions on sale, transfer, and specific use imposed there under as per the provisions of the said Rules. (2) One cannot possess land as owner, tenant or as mortgagee with possession in excess of 10 units. If a family consists of more than five , such family may hold two units per head not exceeding 20 units. PART A [See Section 2(A)(35-A) Classification of Lands A Class Lands having facilities for assured irrigation from such Government Canals and Government Tanks as are capable of supplying water for growing two crops of paddy or one crop of sugarcane in a year. B Class (i) Lands having facilities for assured irrigation from such Government Canals and Government Tanks as are capable of supplying water for growing only one crop of paddy in a year. (ii) Lands irrigated by such lift irrigation projects constructed and maintained by the State Government as are capable of supplying water for growing two crops of paddy or one crop of sugarcane in a year. C Class (i) Lands irrigated from any Government sources of irrigation, including lift irrigation projects constructed and maintained by Government other than those coming under A Class and B Class. (ii) Lands on which paddy crop can be raised or areca crop is grown with the help of rain water. (iii) Lands irrigated by lifting water from a river or Government Canal or Government tank where the pumping installation or other device for lifting water is provided and maintained by the land owner. Notes (1) Lands having facilities for irrigation from a Government Source where the system of water supply is suitable for growing only light irrigated crop namely, crops other than paddy and sugarcane shall come under this class. (2) Lands growing irrigated garden crop will come under classes 'A', 'B' or 'C' as the case may be depending upon the source of irrigation and the system of water supply. D Class Lands classified as dry but not having any irrigation facilities from a Government source. Note.- Lands growing paddy or garden crops not coming under A Class, B Class or C Class shall belong to this class. PART B
Formula of determining equivalent extent of different classes One Acre of A Class land having soil classification value above 8 annas = 1.3 acres of A Class land having soil classification value below 8 annas = 1.5 acres of B Class land having soil classification value above 8 annas = 2.0 acres of B Class land having soil classification value below 8 annas = 2.5 acres of C class land having soil classification value above 8 annas = 3.0 acres of C class land having soil classification value below 8 annas = 5.4 acres of D Class land. Q 21 Is it necessary to obtain permission for transfer of agricultural land granted under Land Grant Rules or granted occupancy right under Land Reforms Act even after lapse of condition for transfer? Ans Yes. Application should be submitted to Tahasildar and acknowledgement is obtained. If permission is not granted within 15 days after getting acknowledgement, document can be ed as if permission is granted. Q 22 What are other restrictions to purchase agricultural land? Ans Lands granted to persons belonging to scheduled caste or scheduled tribe cannot be transferred or purchased without prior permission of the Government. This restriction does not apply to mortgagee in favour of co-operative or scheduled banks and partition among family 2. Social or Industrial organizations can purchase with the permission of the Government (Refer Sec.109 of Karnataka Land Revenue Act, 1964). Q 23 How to get transfer of immovable property? Ans a. As explained under Question 3, if value of property under sale, exchange, lease, and mortgage is Rs.100 or more, deed relating to such transaction must be compulsorily ed (Sec.17 of Registration Act 1908). b. Gift deed, must be ed irrespective of the value of the property. c. After the deed is ed `J' slip is sent to Tahasildar in case of agricultural land and city survey office, in case of city non-agricultural property of properties are under city survey. The purchaser should get confirmed whether khatha is transferred through `J' slip. In areas where there is not city survey is not in operation, one has to apply along with copy of the deed to the concerned Corporation/ Municipal/panchyat office to effect transfer of khatha. Q 24 What is the purpose of Registration? Ans (a) By Registration of transaction of immovable property will become permanent public record. This is a notice to the general public. Those getting transfer of property should whether such property has been previously encumbered. (b) According to Transfer of Property Act right, title or interest can be acquired only if the deed is ed. Q 25 What are the effects of non-registration? Ans If a deed of transfer, which is compulsorily registrable, is not ed it will not be issible in evidence (Sec.49 of Registration Act 1908) Q 26 Is there time limit to present a document for registration after it is executed (signed)? Ans a. Document may be presented for registration within four months from the date of execution (signature).
b. If a document is executed out of India, the period of four months will be counted from the date of its receipt in India. c. After four months document may be presented within another four months with penalty subject to maximum of ten times the registration fees if the District Registrar grants permission. But document may be presented before Sub Registrar within eight months. Thereafter it cannot be accepted for registration. (For details please see Rule 52 of Karnataka Registration Rules, 1965). Q 27 What is the day today timing for acceptance of deeds for registration in Sub Registry offices? Ans Generally deeds are accepted during working hours. Sub Registrar may stop accepting two hours before closing time if he has sufficient work to attend in respect of deeds already received for registration. Provided deeds may be accepted in emergency cases on payment of extra fee of Rs.200 one hour before sunrise and one hour after sunset and on holidays. Q28 Can the document presented for registration be withdrawn? Ans ing officer may permit withdrawal of the document before completion of registration on written request by the party who presented the document. Fifty percent of the registration fee is refundable. Likewise Stamp duty is also refundable subject to deductions. (Please see question No.19 on stamp duty F.A.Q.) Q 29 Who should be present at the time of registration? Ans A deed may be presented for registration either by claiming or executing party but the executant / executants must be present to it execution (g) of the deed (Please see Sec.32 of Registration Act 1908). Q 30 What is the course, if executing party refuses to appear in Registry Office to it execution? Ans a. In such circumstances, ing office will issue notice/ summons to the Executant. If the party does not turn up ing officer will refuse registration. b. Application may be made to the District Registrar on such refusal to the District Registrar who will hold enquiry and decide the case. Rs.250 should be paid for such application. c. One may submit appeal to the Civil Court if District Registrar also refuses to order for registration (For details please see Sec.73, 74, 75, 76 & 77 of Registration Act 1908). Q 31 Who can sign as witness to a document? Ans Any person, above 18 years of age and not a party to the document may sign as witness. Q 32 What is meant by Identifying witness of person presenting/executing a document? Ans In order to identify genuineness of the persons executing the document, signature of identifying witness are obtained. Without such witness, ing officer may refuse registration. Q 33 Who is authorised to write a deed? Ans Deed may be personally written by the executant or may be drafted by a licensed deed writer or advocate.
Q 34 Is it necessary to immovable property by Government as inam or granted on darkhast? Ans They are exempted from registration. Khatha is effected on the basis of orders of Government (see Sec.90 of Registration Act 1908). Q 35 Are there any kind of documents ed without personal appearances of the parties for registration? Ans 1. Mortgage deed executed under Improvement Loans etc. 2. Certificate of sale issued by revenue court. 3. Documents executed by farmers in favour of primary co-operative land development bank to obtain loan and loan bonds executed by farmers in favour of banks under Karnataka Agricultural Credit Co-operations and Miscellaneous Provisions Act 1975 are sent under Sec.89 of the Registration Act and they are filed. Q 36 Is it necessary to deed relating to transfer or assignment of decree relating to immovable property? Ans If value of the property involved in decree is Rs.100 or more and creates, declares, transfer, limit or extinguish right it should be compulsorily ed (See Sec.17 (e) of Registration Act). Q 37 Explain the registration of adoption deed? Ans Adoption deed maybe executed and ed like any other deed. Stamp duty Rs.45 and registration fee Rs.200 are leviable on it. Q 38 Explain the Power of Attorney? Ans There are two kinds of Power of Attorney. 1. General Power of Attorney (GPA) 2. Special Power of Attorney (SPA) a) General Power of Attorney is executed by a person in favour of another to act on behalf of him generally. It may include management of property, Court matter/litigations, sale of mortgage of property or any other act. b) Special Power of Attorney is executed to do a particular act. Power of Attorney holder is answerable to the principal and liable to give s to him. Q 39 Does property get transferred by getting a General Power of Attorney from the person selling it? Can the agent become owner of property? Ans No. It is wrong to say that ownership is transferred by getting General Power of Attorney. Persons purchasing property must get the sale deed ed. This principle applies to other kinds of transactions also. Q 40 Who can execute Power of Attorney? Ans A person who has attained majority may execute power of attorney in favour of another person who has attained majority including family like brother, sister, father and mother to act on his behalf. If a power of attorney is executed to sell property in favour of relatives other than those mentioned above, 2 percent stamp duty shall be paid on market value of such property. If a power of attorney is executed in favour of developers, Builders of apartment, 4 percent stamp duty shall be paid on market value of such property. (see article 5(f) & 41(a), 41(ea), Schedule to Karnataka Stamp Act 1957). Q 41 When would a General Power of Attorney gets cancelled? Ans a. GPA automatically gets cancelled on the death of Executant.
b. Principal (Executant) may cancel it any time. Q 42 What does Irrevocable Power of Attorney mean? Ans If the Power of attorney is executed for consideration in respect of property it cannot be unilaterally revoked, prejudicial to the interest of the agent (See Sec.202 of Indian Contract Act, 1872). Q 43 What is the meaning of a Special Power of Attorney? Ans (a) Power of Attorney executed by a person in favour of another to act on his behalf for specific purpose is called Special Power of Attorney. (b) If a person is unable to go over to registry office to present a document executed in his favour or to it execution of document executed (signed) by him, such power of attorney shall be authenticated or attested by a Sub Registrar. Otherwise they are not acceptable for the purpose of registration. Q 44 Is it compulsory to power of attorney attested in India by Magistrate or notary? Ans They need not be ed. But General Power of Attorney containing authority to present or it execution of a document executed by the principle is not acceptable for such presentation or ission of execution unless they are attested or authenticated by a Sub Registrar. Q 45 Is it compulsory to General Power of Attorney executed by persons residing out of India and attested by officers of Consulate office of India in that country? Ans It is not necessary to . But Stamp duty as per Article 41 shall be paid within 3 months from the date of receipt of the power of attorney in India. Q 46 Is it compulsory to get a Power of Attorney attested by a Sub Registrar if it has already been attested by Magistrate or Notary, under which documents are signed by the agent? Ans Not necessary Q 47 What is meant by Encumbrance Certificate? Ans Encumbrance Certificate is a record showing ed transactions pertaining to a property. If mortgage, sale or any other deeds in respect of a property are ed, encumbrance certificate is issued Form No.15. Click here to Prescribed application form no.22 to obtain Encumbrance Certificate. Q 48 What is meant by a Nil Encumbrance Certificate? Ans If no deeds of transactions are ed in respect of a property nil encumbrance certificate is issued in Form No.16. If Certificate is issued in this form, it means that there are no ed transactions / liabilities on the property for a given period of time uned transactions are not included in this certificate. Click here to Prescribed application form no.22 to obtain Encumbrance Certificate. Q 49 What is the fee for Encumbrance Certificate? Ans a. Application fee Rs.5 b. Rs.30 for search of first year and Rs.10 for every subsequent year. Example: To obtain Encumbrance Certificate for 13 years. Application fee Rs.5-00 plus first year Rs.30-00 plus 12 years Rs.120-00 and total Rs.155-00. Q 50 How to obtain Certified Copy of ed document?
Ans 1. Any person may obtain certified copy of ed document relating to immovable property. 2. Certified copy of ed will may be obtained only by the testator only during his lifetime. Any person may get copy of a will after the death of the testator on production of death certificate. 3. Copies of ed deed of GPA and other documents relating to movables may be obtained by executant / claimant or agent, representative of such person only. Stamp paper of Rs.10 is required to be produced along with the application and copying fee of Rs.3 for every page of Xerox copy or Rs.5 for every 100 words or part thereof is to be paid. Points to be noted by ing public for registration of a document No. Do's Don'ts 1 Meet ingÒ officer directly for your work Do not depend on middlemen for your work 2 Pay the fees required to be paid directly to the ing officer and obtain receipts Do not pay money to the middlemen. 3 Market value of each area is published. Pay stamp duty as per market value Purchase stamp papers from licensed stamp vendors only. Beware of fake stamp papers 4 whether date of delivery of the ed deed is written on the receipt. Keep the receipt securely with you only Don't handover receipt to middlemen. 5 Get information records to be produced for registration in the registry office Don't go for registration without necessary records. 6 Fee for drafting/writing documents are prescribed. Pay accordingly and obtain receipts for it Don't pay without receipt. Do not pay fee for drafting and registration together if demanded. Pay Registration fee directly in the office. 7 higher authorities for any doubts and complaints. Do not conceal your feelings about the officer or staff. Inform the higher authorities. 8 Obtain ed deeds personally or through ed post. Do not depend on middlemen for return of document after registration. 9 Note true market value of property Under valuation is an offence. Q 51 Where can I my immovable property ? Ans Documents pertaining to immovable property shall be ed in the SubRegistrar office in whose jurisdiction the property is situated Or If you have any problem with the Sub-Registrar's office please approach the District Registrar of your district. In Bangalore Urban district still if you have problem in registration you can visit the Office of the Inspector General of Registration where your registration work pertaining to Bangalore Urban district will be attended.
What is a Gift Deed?
A Gift Deed is a legal document that describes voluntary transfer of gift from donor (owner of property) to donee (receiver of gift) without any exchange of money. The donor must be solvent and should not use this tool for tax evasion and illegal gains. What can be gifted? Anything which qualifies as gift must have following properties 1.
It must be well defined existing movable or immovable property
2.
It must be transferable
3.
It should exist today and should not be a future property
4.
It should be tangible.
Steps in gifting process Gifting process can be subdivided into three parts as described below: 1.
Drafting the Gift Deed – A gift deed is drafted with the help of a lawyer and it describes what is being transferred and to whom. Gift Deed is a contract between donor and the donee which defines simultaneous and reciprocal act of giving and taking. A gift to be valid must be made by a person voluntarily and not under compulsion without any exchange of money.
2.
Acceptance – Acceptance of the gift after its execution is a legal requirement and Donee must accept the gift during the lifetime of donor. In case donee fails to accept the gift, it is rendered invalid. The acceptance may be validated by acts such as taking possession of the property.
3.
Registration – As per Section 123 of the Transfer of Property Act, a gift of immovable property cannot any title to the donee unless it is ed. Attestation by two witnesses is required during registration and post registration, title transfer is possible.
How to a Gif Deed? Registration of gift deed is done as per the provisions of the Registration Act, 1908. Common steps involved in registration process are: 1. 2.
Valuation of property being gifted by an approved valuation expert. Payment of Stamp duty and transfer duty – Stamp duty varies for women and men (Slightly lower for women). Stamp duty also varies from state to state and for latest rates one should visit official state government website.
In case of Minor
Legally speaking person who owns the property can make a gift to any other person. An exception to this rule is the case in which either of donor or donee is a minor. Minors are not eligible to contract; therefore they cannot transfer property as a gift. A gift deed in case of donor being a minor is legally not valid. In case of donee being a minor, a natural guardian can accept a gift on his behalf. Guardian acts as a manager of the gifted property, and if the gift is onerous, the obligation cannot be enforced on donee until he/she is a minor. Once the donee is an adult, he must either accept the burden or return the gift. Pros and Cons of Gift deed over Will
Pros
Cons
1. It is executed during the life time of donor 1. Gift deed is irrevocable post and transfer happens immediately whereas execution but “Will” can be changed “Will” is applicable after death. as many times as you want. 2. Gift deed needs to be ed; only then it 2. There is extra cost in the form of is effective. Registration renders it less liable to Stamp Duty in case of Gift Deeds. litigation. “Will” on the other hand is prone to Stamp duty varies from state to state. litigation. 3. Transfer using gift deeds are tax free in the hands of donor and donee.
Only ed Gift Deed of Property Is Valid It is invalid if a gift of a property is not ed. Documents should be stamped and ed as required, and attested by two witnesses. A Gift Deed is a legal document that states how much you received, from whom and when. Any person who is competent to contract can gift his property. The person transferring the property is called the donor and the person accepting the gift is the Donee. A minor cannot be a donor but can be a Donee. If the property is gifted to a minor, on behalf of a minor, a natural guardian can accept a gift containing a condition that the person nominated in the gift deed will act as a manager of the gifted property. The person making the gift and the one receiving must both sign the gift deed. Valid Gift of Immovable Property
A gift of immovable property, which is not ed, is bad in law and cannot any title to the Donee. A valid gift of property can be made only by a ed instrument. According to section 123 of The Transfer of Property Act, it is invalid if a gift of a property is not ed. Documents should be stamped and ed as required, and attested by two witnesses. There are some conditions to be met to make a gift of property valid as specified by the Transfer of Property Act. Following are the conditions to be met to make a gift of property valid. 1. A transfer of property must be voluntary and made gratuitously. 2. It must satisfactorily appear that the donor knew what he was doing and understood the contents of the instrument and its effect. 3. Documents should be stamped and ed as required, and attested by two witnesses. 4. A valid gift of property can be made only by a ed instrument. 5. The Person to whom the property is being transferred (Donee) must accept the property during the lifetime of the donor. If the Donee dies before accepting the gift, the gift becomes void. 6. A minor cannot be a donor but can be a Donee. If the property is gifted to a minor, on behalf of a minor, a natural guardian can accept a gift. 7. If the gift is onerous, the obligation cannot be enforced against him while he is a minor. But later, he must either accept the burden or return the gift.
8. The gift of property must be without any consideration, absolute and unconditional except when made for a specific purpose. If there is any consideration in any shape, there is no gift. 9. Any person who is competent to contract can gift his property. Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is sound mind and is not disqualified from contracting by any law to which he is subject. 10.The person offering the gift and the one receiving must both sign the gift deed.
Gift deed procedure There is no specific procedure to receive a gift. But do accept the gift in writing. You can do this via a gift deed. According to section 123 of The Transfer of Property Act, it is invalid if a gift of immovable property is not ed. Immovable property is a legal term that encomes land along with anything permanently affixed to the land, such as buildings. Gift deed of immovable property compulsorily ed and the transfer must be effected by a ed instrument signed by or on behalf of the donor, and attested by at least two witnesses. A Gift Deed may be executed to the Blood Relations and Third Parties. However, the Person to whom the property is being transferred (Donee) must accept the property during the lifetime of the donor. If the Donee dies before accepting the gift, the gift becomes void.
Gift deed Documents Following are the list of documents (enclosures) required to be produced at the time of presentation of the document before the jurisdictional Sub-Registrar.
An Identical copy of the Gift-deed containing name and details of Donor and Donee, property Details and property value in the prescribed format of Gift Deed.
Statement of particulars of property and its market value.
Parent Document (prior to title deeds)
Title Deeds to show how the Donor gets the property.
Encumbrance Certificate of the property
Affidavit which state that Registration of this document does not violate the notification issued under Section 22A of the Registration Act, 1908.
Extract of assessment of the property.
If the property is an agricultural land, No objection certificate from Tahasildar. A gift is the transfer of property by one person to another made voluntarily and without consideration. In order to constitute a valid gift, a basic requirement is acceptance. If a document of gift, after its execution or registration in favor of the donee, is handed over to him by the donor, it amounts to a valid acceptance of the gift. The gift must be an existing property. It cannot be a future property. Section 126 of the Transfer of Property Act provides that a gift may be revoked if some conditions are met. The donor and donee must have agreed that the gift will be suspended or revoked on the happening of a specified event. A gift which was not based on fraud, undue influence, misrepresentation or an onerous one, cannot be cancelled unilaterally. Such a gift deed can be cancelled only by resorting to legal remedy in a court of law. Gift Deed Is Invalid Without Registration A gift deed or Deed of gift is a deed that is executed and delivered in which the Donor transfers title to the Donee without any payment or considerations. A gift deed that has not been ed does not any title of ownership of the property in favour of the donee.The person who transfers the property is called “Donor” and the person to whom the property is being transferred called “Donee”. A transaction of gift will be complete, only if the donee accepts the gift during the lifetime of the donor. A gift deed is made voluntarily and without consideration. Any person who is the legal owner of a property can make a gift of his property.
Conditions for Valid Gift Deed
There are some conditions to be met to make a gift of property valid as specified by the Transfer of Property Act. Any person who is the legal owner of a property can make a gift of his property but a gift by a minor is void. Following are some points that need to be considered while drafting a gift deed to make a valid gift of property.
Gift Deed: According to section 123 of The Transfer of Property Act, it is invalid if a gift of a property is not ed. All the required documents should be stamped and ed. It should be attestation by two witnesses. A gift of property is invalid without a registration done.
Donee has to accepts the gift: The Person to whom the property is being transferred (Donee) must accept the property during the lifetime of the donor. A transaction of gift will be complete, only if the donee accepts the gift during the lifetime of the donor. If the donee dies before accepting the gift, the gift becomes void.
Gift Deed to Minor: A minor cannot be a donor and a gift by a minor will be void. If the property is gifted to a minor, on behalf of a minor, a natural guardian can
accept a gift containing a condition that the person nominated in the gift deed will act as a manager of the gifted property. While a minor may be a donee, if the gift is onerous, the obligation cannot be enforced against him while he is a minor. But later, he must either accept the burden or return the gift.
No Consideration: Love, affection, spiritual benefit and many other factors may enter in the intention of the donor to make a gift but if there is any consideration in any shape, there is no gift. The gift of property must be absolute and unconditional except when made for a specific purpose.
Invalid Gift of Property A gift deed or Deed of gift is invalid or void if it is not ed or executed. Other conditions that make a gift deed invalid or void are following.
The deed is executed and delivered by a minor.
The deed is not signed by the donor, donee or attested by witnesses.
The donee fails to accept the gift during the lifetime of the donor.
A conditional gift and the condition is not fulfilled.
The donee dies before acceptance, the gift is void.
The property transferred or gifted for consideration.
A gift of a thing to two or more donees, of whom one does not accept it, is void as to the interest which he would have taken had he accepted.
Steps Involved in Transfer of Property in Gift Deed
Execution of the gift deed
Donee’s acceptance of the gift (Acceptance can be express or implied)
Payment of adequate stamp duty and registration of the property
Handing over of possession of the property
Mutation of the property in the municipal records by donee in his name, if required.
Revoking a gift
Section 126 of the Transfer of Property Act provides that a gift may be revoked if the donor and donee may agree that on the happening of any specified event which does not depend on the will of the donor a gift shall be suspended or revoked. Such an event must not depend on the donor’s will. The condition should not be illegal or against the estate created under the gift. A gift which was not based on fraud, undue influence, misrepresentation or an onerous one, cannot be cancelled unilaterally. Complete absence of monetary consideration is an important prerequisite. The transfer of property must be voluntary and made gratuitously. It must also satisfactorily appear that the donor knew what he was doing and understood the contents of the instrument and its effect. The gift must be an existing property. It cannot be a future property. Any person who is the legal owner of a property can make a gift of his property. If the property is gifted to a minor, a natural guardian can accept a gift containing a condition that the person nominated in the gift deed will act as a manager of the gifted property. Do you have to pay Income Tax on Gifts Received ? Rules and Exemptions ! Do you know that, when some one deposits some money in your bank , what is its taxation angle ? A lot of people take some loan from their friends for few months and then return it back, but never think twice about it from taxation angle? Your parents deposit some money to your bank because you want to pay the down payment of your house. While it’s a help from your parents, have you ever thought if you have to pay tax on that amount or not? In this article lets see all the aspects about these kind of transactions, when money comes and goes out of your bank and what are the rules for income tax on gifts received from relatives or other people in India . Let us first see what kind of situations we are talking about ?
You swiped your credit card for your friend Rs 20,000 purchase and then your friend paid back money to you by transferring it to your bank .
You asked Rs 50,000 from your friend as loan and paid him back after 1 month.
You got Rs 50,000 cheque from your relative on your wedding.
Your father transferred some money you your bank as help for some purpose.
These are few instances, which happens in our lives. But its very important for you to understand the tax implications in various scenarios and the possible issues which can come up in the future, if income tax department decides to scrutinize your income tax returns for example. By understanding the gift tax rules and precautions to take, you will be safe. So now, let’s look at 5 points which will help you understand rules about incomes tax on gifts in a better way. By virtue of Section 56(2), any sum of money exceeding Rs. 50000 received without consideration by an individual or an HUF from any person is chargeable to tax as income under “other sources” subject to some exclusions . Below we are going to see all those exclusions and gift tax rules.
1. Upto Rs 50,000/year is not taxable The first major rule which every person should know is that there is no tax to be paid on gifts received (cash or kind), if the amount of the gift is upto Rs 50,000 in a year. However if the total amount crosses Rs 50,000 . Then you will have to pay the tax on the total amount recieved (not additional). For example – If a friend of yours gifts you Rs 30,000 in a given year, you don’t have to pay any tax on that amount, as its below the limit of Rs 50,000 . Now suppose you also get Rs 20,000 after that, still you don’t have to pay the tax as the total worth of the gift you got in the year was Rs 50,000 till now (less than the limit of Rs 50,000) . But now, if someone gifts you another Rs 10,000 . Your total gifts in a year is Rs 60,000, so you will have to pay tax on the total amount of Rs 60,000 , not just on additional Rs 10,000 . This Rs 60,000 will be included in your income and you will have to pay tax on this Rs 60,000, as per your tax slab. Note that this is exactly how the written law is. Since 1/10/2009, Section 56(2) has been amended and the scope of ‘’gifts’’ will include even immovable properties or any other property besides sums of money under its ambit. 2. Any amount received by relatives is not taxable at all Another rule for income tax on gifts, is that any amount received from specified relatives is totally tax free in the hands of recipient. So if a relative gives you gift in form of cash/cheque or in consideration, you will not have to pay any tax on the amount received. Following is the list of relations which are considered as “relatives” for this
Your spouse
Your brother or sister
Brother or sister of your spouse
Brother or sister of either of your parents
Any of your lineal ascendants or descendants
Any lineal ascendant or descendant of your spouse
Spouse of the persons referred in above points
Example – So if you want to buy a house and your father/mother/sister/brother etc transfer Rs 20 lacs to your bank . You don’t need to worry about the taxation part, because its a gift from your relatives and you will not have to pay any tax on this amount. However its a good practice to do the documentation for this, if the amount if pretty big like in this example. All you need to do is document this transaction on a paper which clearly states that who transferred the money and the reason for it, along with the signatures of both parties. In future, if there is any income tax scrutiny, this small piece of proof will be handy and will help you a lot.
Important – Note that, there is no income tax to be paid on the money received from relatives, however at times income clubbing provisions may apply, for example, if a husband gifts Rs 10,00,000 to wife, there is no ta to be paid by wife on Rs 10 lacs received, however when she invests that money and if any interest income is generated, it will be clubbed with husband income. Read all about income tax clubbing rules here. 3. Any amount received as Wedding Gift is not taxable One of the few advantages of getting married is that any amount you get, as wedding gift is not taxable in your hands, either from relative or non-relative . So even if you get Rs 1 crore as wedding gift from someone in your wedding, it’s not taxable in your hands. Lets see some examples Suppose if your spouse parents give you some gift worth Rs 10 lacs on marriage, it will be treated as a wedding gift and will not be taxed. However, it is not clear by provision, whether the gifts should have been on the exact date of marriage, or a few days before or later. Normally, it should be sufficient if the gift is given just on the occasion of the marriage, means either on the day of the marriage itself or a day or two before or after. Practical common sense view would prevail in such cases.
4. Gift Tax on Movable/ Immovable properties There is a valuation aspect involved in gifting of immovable properties
If the property is gifted without any consideration then if the stamp duty value exceeds Rs. 50000/-, stamp duty value will be taken
If the property is gifted for a consideration, then the actual value of the property will be taken
In case of other properties:
If gifted without consideration and fair market value exceeds 50,000, then the fair market value will be taken as the final value
If gifted for a consideration and the Fair Market Value (FMV) less consideration is greater than 50000, then the FMV less consideration amount will be taken as the value of the gift.
5. No tax on the amount received through WILL or Inheritance When any sum of money or any property is received under a will or by way of inheritance, it is totally exempt from Gift Tax. So if you get a real estate worth Rs 50,00,000 and some other things worth Rs 30,00,000 through inheritance , you will not have to pay any tax on that amount received. Be cautious about the take and give transactions
At times, we ask for money from our friends for some purpose and then give it back. One of the examples I can give is what I heard from one of the readers in comments section. He swiped his credit card for a friend for Rs 50,000 and then asked his friend to pay him back through online banking. Here if you see, the amount came to his , however it was a reverse transaction and not actually a gift, so ideally this transaction should not be considered at all. If its a small amount and can be justified with proofs, there is not much to worry about this. But in this case, lets say there is a income tax scrutiny, and tax inspector asks you about this “Rs 50,000″ coming to your . Now – You can clearly say that the money you got from your friend was a amount which you got back because you paid Rs 50,000 to him through your credit card. But just saying this will not be enough, He will ask you to prove it. Then you will have to bring your credit card statement, and prove to him that this was done by you for your friend and no one else. The point here is – no matters how truthful you are, there should be something you can show to income tax officers in case this is questioned. So for any transaction like this, which involves a big amount, its always a good idea to have a proof, like in the example I just gave, the credit card statement will be handy along with a small note, where you friend signs saying that you swiped your credit card for him and he will pay back the money through netbanking. In this same case, If you cant prove that this money was just a “reverse entry” , you can imagine the situation. Even if you were clean, the whole amount would be added to your income and you need to pay income tax based on your tax slabs on the ground of uned income. Another point, worth nothing is that just because you have a reverse transaction, the other party can get into trouble. For example, suppose you give Rs 20 lacs to your friend, who wanted the money for buying a house and then your friend gives back those Rs 20 lacs in 3 months. Note that now there is a clear entry that you gave your friend Rs 20 lacs, so in future income tax department can reach you through your friend and ask you about this Rs 20 lacs and from where you got so much of money. They can ask you to justify the source of this money. So always keep these points in your mind. How to document Gift transactions, ed Deed or plain paper? A gift deed is a deed, that is executed and delivered in which the donor transfers title to the receiver without any payment or considerations. It a document which transfer the legal title of the property to the donor, where the consideration is not monetary but is made in return for love and affection. There is indistinctness with respect to compliance of the gift deed at times, Whether a gift deed is required to be made in every circumstance When it is required to be stamped OR get ed? Gift made by way of cash or cheque does not mandatory requires to be executed through a gift deed. Writing a plain typed note on a paper will generally suffice. It is not required to be stamped and registration is also not needed. You may simply mention the names of persons, their relation and that the gift is being given out of love and affection.
Gift made by way of movable property is required to be made in stamp paper and stamped by the notary or court, and registration of gift deed is not required in this case. For the purpose of making a gift of immovable property, the transfer must be effected by a ed instrument signed by or on behalf of the donor. Gift of immovable property which is not ed is not valid as per law and cannot any title to the receiver.
(v) Grant, sanad / Inam by the Government Through decree of Court. There are two ways of acquisition: 1.By act of parties. Example: Purchase, gift etc. 2. By operation of law Example: Inheritance, decree of Court etc. (for details please see Transfer of Property Act, 1882 (Central Act)) Q 2 Is it necessary to in Office of the Sub Registrar to get khata transferred in respect of property acquired by inheritance? Ans Not necessary. After the death of owner of a property his heirs, such as wife, children i.e. male and female, married or unmarried may get the Khata transferred on production of death certificate of the owner with details of property held by him to the following officers. If property is an agricultural land - Tahasildar (See Sec.128 of Karnataka Land Revenue Act, 1964) Offices of Corporation, Municipality, Panchayat or City survey if such office exists. Q 3 Which are the documents requires to be compulsorily ed? Ans 1. Gift deed of immovable property. 2. Other non-testamentary instruments, which purport or Operate to create, declare, assign, limit or extinguish whether in the present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property; 3. Non testamentary instruments which acknowledge the receipt or payment of any consideration on of the creation, declaration, assignment, limitation or extension of any such right, title or interest; 4. Leases of immovable property from year or for any term exceeding one year, or reserving a yearly rent; 5. Non testamentary instruments transferring or asg any decree or order of a court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extinguish whether in the present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property; 6. The documents containing contracts to transfer for consideration, any immovable property for the purpose of section 53A of the Transfer of Property Act, 1882 shall be ed if they have been executed on or after the commencement of the Registration and Other Related Laws (Amendment) Act, 2000 and if such documents are not ed on or after such commencement, then, they shall have no effect for the purposes of the said section 53A Q 4 How to effect partition of .property? Ans a. If all the parties have share (common right) in the property partition can be effected. If partition is effected through an instrument such instrument must be compulsorily ed. b. Oral partition affected through memorandum submitted to the concerned authorities need not be ed.
c. Stamp duty has to be paid in respect any kind of partition whether it is to be compulsorily ed or not. d. Parties to the partition may agree to effect partition of unequal shares. Q 5 When there are two or more heirs, can one or two be made full owners by others taking money in lieu of their share? Ans a) Yes. Any of the co-owners can individually or collectively release his / their right in favour of one or more collectively as the case may be and make him / them full owner. This kind of release can be with or without payment of money. This document is called Release. b) Release can be made not only in case of inherited property but also in case of t purchase/acquisition. Q 6 What is a will? Ans A testamentary document by which a person bequeaths his property to be effective on his death is a will. The property will devolve on the person in whose favour it is bequeathed after death of testator. Q 7 Who can execute a will? Ans a) Any person above the age of 18 years and mentally sound may execute will, but will caused by fraud or coercion or by importunately will not be valid. Therefore a will must be executed voluntarily. b) Parents or guardians cannot execute will on behalf of minors or lunatics. c) Attestation by minimum two witnesses is necessary. d) Scribe (deed writer / advocate) cannot be called witness. Two independent attesting witnesses other than the scribe or necessary. e) Beneficiary under a will should not sign as attesting witness. In order to avoid disputes in implementation of a will, description of property and the beneficiaries should be clearly be written without giving room for any doubt. Q 8 Is it compulsory to a will? Ans It is not compulsory to . Executants may at his option. It is better to the will. If original is lost a certified copy can be obtained from SubRegistrar Office. Q 9 Where can the will be ed? Ans It can be ed in any office of the Sub Registrar in India Q 10 Is there any time limit to a will? Ans There is no such time limit Q 11 Can a will be cancelled? Ans The testator can cancel his will at anytime during his lifetime. Such cancellation deed requires a Stamp duty of Rs.100-00 Q 12 Can a ed will be rectified or changed? Ans If executant of a will wishes to rectify, add to will may do so during his lifetime. This is called codicil. This document does not require stamp duty.
Q 13 Can a will be ed even after death of testator? Ans Yes, claiming party under the will have to produce will, records relating to the death of the testator, witness and the scribe before the Sub Registrar. If Sub Registrar is satisfied about the truth and genuineness of the execution of the will, he will . Q 14 What is the Stamp duty and Registration fee to a will? Ans There is no Stamp duty on will deed. For registration of will during the life time of the testator Rs.200-00 Registration fee prescribed. To the will after the death of the testator Registration fee of Rs.200-00 and enquiry fee of Rs.250-00 is prescribed. Q 15 Is the certified copy of a ed will available to any body? Ans A certified copy of a ed will is available to the testator only during his lifetime. After his death anybody can obtain after producing proof of death of testator. Q 16 How to keep contents of a will confidential? Ans Will can be deposited in a sealed cover in office of the District Registrar. A fee of Rs.1000-00 prescribed to deposit will in a sealed cover. Depositor or authorized person (executor) can withdraw the sealed cover containing a will, if desires to do so. A Registration of Rs.200-00 prescribed. Q 17 What is the procedure to obtain the sealed cover containing a will after the death of the depositor? Ans On making an application along with proof of the death of the depositor, District Registrar will open sealed cover in the presence of the applicant and it will be ed. Certified copy will be issued if desired. A fee of Rs.100-00 prescribed to open a sealed cover. Q 18 What is the procedure for change of khata of the properties obtained through will? Ans After the death of the testator person claiming through the will have to apply to the concerned authorities as explained in question no.2 along with the copy of the will and death proof. Q 19 What are the duties and liabilities of buyers and sellers while purchasing a property? Ans Following is the duties and liabilities of buyers and sellers Before sale Liabilities of seller Liabilities of purchaser To inform defects in the property To provide records of right To execute sale deed Payment of consideration To pay of the liabilities on the property Rights Rights of seller Rights of buyer To get rent and profits Right of encumbrance on consideration already paid After completion of sale
Liabilities of seller Liabilities of purchaser To hand over possession Liability on accidental or loss to the property Information about right To hand over records of rights after receipt of consideration Duty to pay taxes and liabilities after taking possession of property Rights of seller Rights of buyer If consideration is due encumbrance on property of such dues Incremental value/profit on property Though there are rights and duties the purchaser should carefully examine the following matters; 1) Original documents. 2) How did the seller acquire the property. 3) Encumbrance Certificate of the property for a minimum period of 15 years from Sub Registry Office to know if there are any encumbrances on the property to be purchased. 4) from the concerned court if there are any litigations on the property to be purchased. 5) if there are any litigations, objections in revenue, municipal offices about inheritance or any other matter. 6) If seller is a power of attorney holder, it should be verified from the principal and if such power of attorney is genuine and whether it is still in force. 7) It should be verified whether the transaction is opposed to public policy under Section 22A of the Registration Act, 1908. If so the document will not be ed. 8) If the Property is a granted land to the member of scheduled caste and scheduled tribe, it should be verified if the transaction is in contravention of the and conditions of grant and whether permission of the Government is obtained for transfer. Q 20 What are the transactions opposed to public policy? Ans Government has declared the following as opposed to public policy under Section 22A of Registration Act, 1908 namely,(1) (a) Agreement to sell, sale, gift, exchange, mortgage, lease or assignment of land of which the occupancy right has been granted under Chapter III of the Karnataka Land Reforms Act, 1961 in contravention of the restrictions imposed under section 61 of the said act and the rules framed there under. (b) Agreement to sell, sale, gift, exchange or otherwise of any land in excess of the ceiling limit specified in section 63 or 64 of the Karnataka Land Reforms Act, 1961 in contravention of section 74 of the said act and the rules framed there under. (c) Agreement to sell, sale, lease, mortgage with possession or otherwise of any agricultural lands to a person or a family or a t family who or which has an assured annual income of rupees Two lakhs and above from sources other than agriculture in contravention of section 79-A of the Karnataka Land Reforms Act, 1961 and the rules framed there under. (d) Agreement to sell, sale, lease, mortgage with possession or otherwise of any agricultural land to an educational, religious, charitable institution society, trust, company, association, other body of individuals or a co-operative Society other than the co-operative farming society in contravention of section 79-B of the Karnataka Land Reforms Act, 1961 subject to the exceptions and exemptions provided under section 109 of the said act and the rules framed there under.
(e) Agreement to sell, sale, gift, lease, mortgage with possession or otherwise of any agricultural land granted under the Karnataka Land Grant Rules, 1969 subject to restrictions on sale, transfer, and specific use imposed there under as per the provisions of the said Rules. (2) One cannot possess land as owner, tenant or as mortgagee with possession in excess of 10 units. If a family consists of more than five , such family may hold two units per head not exceeding 20 units. PART A [See Section 2(A)(35-A) Classification of Lands A Class Lands having facilities for assured irrigation from such Government Canals and Government Tanks as are capable of supplying water for growing two crops of paddy or one crop of sugarcane in a year. B Class (i) Lands having facilities for assured irrigation from such Government Canals and Government Tanks as are capable of supplying water for growing only one crop of paddy in a year. (ii) Lands irrigated by such lift irrigation projects constructed and maintained by the State Government as are capable of supplying water for growing two crops of paddy or one crop of sugarcane in a year. C Class (i) Lands irrigated from any Government sources of irrigation, including lift irrigation projects constructed and maintained by Government other than those coming under A Class and B Class. (ii) Lands on which paddy crop can be raised or areca crop is grown with the help of rain water. (iii) Lands irrigated by lifting water from a river or Government Canal or Government tank where the pumping installation or other device for lifting water is provided and maintained by the land owner. Notes (1) Lands having facilities for irrigation from a Government Source where the system of water supply is suitable for growing only light irrigated crop namely, crops other than paddy and sugarcane shall come under this class. (2) Lands growing irrigated garden crop will come under classes 'A', 'B' or 'C' as the case may be depending upon the source of irrigation and the system of water supply. D Class Lands classified as dry but not having any irrigation facilities from a Government source. Note.- Lands growing paddy or garden crops not coming under A Class, B Class or C Class shall belong to this class. PART B
Formula of determining equivalent extent of different classes One Acre of A Class land having soil classification value above 8 annas = 1.3 acres of A Class land having soil classification value below 8 annas = 1.5 acres of B Class land having soil classification value above 8 annas = 2.0 acres of B Class land having soil classification value below 8 annas = 2.5 acres of C class land having soil classification value above 8 annas = 3.0 acres of C class land having soil classification value below 8 annas = 5.4 acres of D Class land. Q 21 Is it necessary to obtain permission for transfer of agricultural land granted under Land Grant Rules or granted occupancy right under Land Reforms Act even after lapse of condition for transfer? Ans Yes. Application should be submitted to Tahasildar and acknowledgement is obtained. If permission is not granted within 15 days after getting acknowledgement, document can be ed as if permission is granted. Q 22 What are other restrictions to purchase agricultural land? Ans Lands granted to persons belonging to scheduled caste or scheduled tribe cannot be transferred or purchased without prior permission of the Government. This restriction does not apply to mortgagee in favour of co-operative or scheduled banks and partition among family 2. Social or Industrial organizations can purchase with the permission of the Government (Refer Sec.109 of Karnataka Land Revenue Act, 1964). Q 23 How to get transfer of immovable property? Ans a. As explained under Question 3, if value of property under sale, exchange, lease, and mortgage is Rs.100 or more, deed relating to such transaction must be compulsorily ed (Sec.17 of Registration Act 1908). b. Gift deed, must be ed irrespective of the value of the property. c. After the deed is ed `J' slip is sent to Tahasildar in case of agricultural land and city survey office, in case of city non-agricultural property of properties are under city survey. The purchaser should get confirmed whether khatha is transferred through `J' slip. In areas where there is not city survey is not in operation, one has to apply along with copy of the deed to the concerned Corporation/ Municipal/panchyat office to effect transfer of khatha. Q 24 What is the purpose of Registration? Ans (a) By Registration of transaction of immovable property will become permanent public record. This is a notice to the general public. Those getting transfer of property should whether such property has been previously encumbered. (b) According to Transfer of Property Act right, title or interest can be acquired only if the deed is ed. Q 25 What are the effects of non-registration? Ans If a deed of transfer, which is compulsorily registrable, is not ed it will not be issible in evidence (Sec.49 of Registration Act 1908) Q 26 Is there time limit to present a document for registration after it is executed (signed)? Ans a. Document may be presented for registration within four months from the date of execution (signature).
b. If a document is executed out of India, the period of four months will be counted from the date of its receipt in India. c. After four months document may be presented within another four months with penalty subject to maximum of ten times the registration fees if the District Registrar grants permission. But document may be presented before Sub Registrar within eight months. Thereafter it cannot be accepted for registration. (For details please see Rule 52 of Karnataka Registration Rules, 1965). Q 27 What is the day today timing for acceptance of deeds for registration in Sub Registry offices? Ans Generally deeds are accepted during working hours. Sub Registrar may stop accepting two hours before closing time if he has sufficient work to attend in respect of deeds already received for registration. Provided deeds may be accepted in emergency cases on payment of extra fee of Rs.200 one hour before sunrise and one hour after sunset and on holidays. Q28 Can the document presented for registration be withdrawn? Ans ing officer may permit withdrawal of the document before completion of registration on written request by the party who presented the document. Fifty percent of the registration fee is refundable. Likewise Stamp duty is also refundable subject to deductions. (Please see question No.19 on stamp duty F.A.Q.) Q 29 Who should be present at the time of registration? Ans A deed may be presented for registration either by claiming or executing party but the executant / executants must be present to it execution (g) of the deed (Please see Sec.32 of Registration Act 1908). Q 30 What is the course, if executing party refuses to appear in Registry Office to it execution? Ans a. In such circumstances, ing office will issue notice/ summons to the Executant. If the party does not turn up ing officer will refuse registration. b. Application may be made to the District Registrar on such refusal to the District Registrar who will hold enquiry and decide the case. Rs.250 should be paid for such application. c. One may submit appeal to the Civil Court if District Registrar also refuses to order for registration (For details please see Sec.73, 74, 75, 76 & 77 of Registration Act 1908). Q 31 Who can sign as witness to a document? Ans Any person, above 18 years of age and not a party to the document may sign as witness. Q 32 What is meant by Identifying witness of person presenting/executing a document? Ans In order to identify genuineness of the persons executing the document, signature of identifying witness are obtained. Without such witness, ing officer may refuse registration. Q 33 Who is authorised to write a deed? Ans Deed may be personally written by the executant or may be drafted by a licensed deed writer or advocate.
Q 34 Is it necessary to immovable property by Government as inam or granted on darkhast? Ans They are exempted from registration. Khatha is effected on the basis of orders of Government (see Sec.90 of Registration Act 1908). Q 35 Are there any kind of documents ed without personal appearances of the parties for registration? Ans 1. Mortgage deed executed under Improvement Loans etc. 2. Certificate of sale issued by revenue court. 3. Documents executed by farmers in favour of primary co-operative land development bank to obtain loan and loan bonds executed by farmers in favour of banks under Karnataka Agricultural Credit Co-operations and Miscellaneous Provisions Act 1975 are sent under Sec.89 of the Registration Act and they are filed. Q 36 Is it necessary to deed relating to transfer or assignment of decree relating to immovable property? Ans If value of the property involved in decree is Rs.100 or more and creates, declares, transfer, limit or extinguish right it should be compulsorily ed (See Sec.17 (e) of Registration Act). Q 37 Explain the registration of adoption deed? Ans Adoption deed maybe executed and ed like any other deed. Stamp duty Rs.45 and registration fee Rs.200 are leviable on it. Q 38 Explain the Power of Attorney? Ans There are two kinds of Power of Attorney. 1. General Power of Attorney (GPA) 2. Special Power of Attorney (SPA) a) General Power of Attorney is executed by a person in favour of another to act on behalf of him generally. It may include management of property, Court matter/litigations, sale of mortgage of property or any other act. b) Special Power of Attorney is executed to do a particular act. Power of Attorney holder is answerable to the principal and liable to give s to him. Q 39 Does property get transferred by getting a General Power of Attorney from the person selling it? Can the agent become owner of property? Ans No. It is wrong to say that ownership is transferred by getting General Power of Attorney. Persons purchasing property must get the sale deed ed. This principle applies to other kinds of transactions also. Q 40 Who can execute Power of Attorney? Ans A person who has attained majority may execute power of attorney in favour of another person who has attained majority including family like brother, sister, father and mother to act on his behalf. If a power of attorney is executed to sell property in favour of relatives other than those mentioned above, 2 percent stamp duty shall be paid on market value of such property. If a power of attorney is executed in favour of developers, Builders of apartment, 4 percent stamp duty shall be paid on market value of such property. (see article 5(f) & 41(a), 41(ea), Schedule to Karnataka Stamp Act 1957). Q 41 When would a General Power of Attorney gets cancelled? Ans a. GPA automatically gets cancelled on the death of Executant.
b. Principal (Executant) may cancel it any time. Q 42 What does Irrevocable Power of Attorney mean? Ans If the Power of attorney is executed for consideration in respect of property it cannot be unilaterally revoked, prejudicial to the interest of the agent (See Sec.202 of Indian Contract Act, 1872). Q 43 What is the meaning of a Special Power of Attorney? Ans (a) Power of Attorney executed by a person in favour of another to act on his behalf for specific purpose is called Special Power of Attorney. (b) If a person is unable to go over to registry office to present a document executed in his favour or to it execution of document executed (signed) by him, such power of attorney shall be authenticated or attested by a Sub Registrar. Otherwise they are not acceptable for the purpose of registration. Q 44 Is it compulsory to power of attorney attested in India by Magistrate or notary? Ans They need not be ed. But General Power of Attorney containing authority to present or it execution of a document executed by the principle is not acceptable for such presentation or ission of execution unless they are attested or authenticated by a Sub Registrar. Q 45 Is it compulsory to General Power of Attorney executed by persons residing out of India and attested by officers of Consulate office of India in that country? Ans It is not necessary to . But Stamp duty as per Article 41 shall be paid within 3 months from the date of receipt of the power of attorney in India. Q 46 Is it compulsory to get a Power of Attorney attested by a Sub Registrar if it has already been attested by Magistrate or Notary, under which documents are signed by the agent? Ans Not necessary Q 47 What is meant by Encumbrance Certificate? Ans Encumbrance Certificate is a record showing ed transactions pertaining to a property. If mortgage, sale or any other deeds in respect of a property are ed, encumbrance certificate is issued Form No.15. Click here to Prescribed application form no.22 to obtain Encumbrance Certificate. Q 48 What is meant by a Nil Encumbrance Certificate? Ans If no deeds of transactions are ed in respect of a property nil encumbrance certificate is issued in Form No.16. If Certificate is issued in this form, it means that there are no ed transactions / liabilities on the property for a given period of time uned transactions are not included in this certificate. Click here to Prescribed application form no.22 to obtain Encumbrance Certificate. Q 49 What is the fee for Encumbrance Certificate? Ans a. Application fee Rs.5 b. Rs.30 for search of first year and Rs.10 for every subsequent year. Example: To obtain Encumbrance Certificate for 13 years. Application fee Rs.5-00 plus first year Rs.30-00 plus 12 years Rs.120-00 and total Rs.155-00. Q 50 How to obtain Certified Copy of ed document?
Ans 1. Any person may obtain certified copy of ed document relating to immovable property. 2. Certified copy of ed will may be obtained only by the testator only during his lifetime. Any person may get copy of a will after the death of the testator on production of death certificate. 3. Copies of ed deed of GPA and other documents relating to movables may be obtained by executant / claimant or agent, representative of such person only. Stamp paper of Rs.10 is required to be produced along with the application and copying fee of Rs.3 for every page of Xerox copy or Rs.5 for every 100 words or part thereof is to be paid. Points to be noted by ing public for registration of a document No. Do's Don'ts 1 Meet ingÒ officer directly for your work Do not depend on middlemen for your work 2 Pay the fees required to be paid directly to the ing officer and obtain receipts Do not pay money to the middlemen. 3 Market value of each area is published. Pay stamp duty as per market value Purchase stamp papers from licensed stamp vendors only. Beware of fake stamp papers 4 whether date of delivery of the ed deed is written on the receipt. Keep the receipt securely with you only Don't handover receipt to middlemen. 5 Get information records to be produced for registration in the registry office Don't go for registration without necessary records. 6 Fee for drafting/writing documents are prescribed. Pay accordingly and obtain receipts for it Don't pay without receipt. Do not pay fee for drafting and registration together if demanded. Pay Registration fee directly in the office. 7 higher authorities for any doubts and complaints. Do not conceal your feelings about the officer or staff. Inform the higher authorities. 8 Obtain ed deeds personally or through ed post. Do not depend on middlemen for return of document after registration. 9 Note true market value of property Under valuation is an offence. Q 51 Where can I my immovable property ? Ans Documents pertaining to immovable property shall be ed in the SubRegistrar office in whose jurisdiction the property is situated Or If you have any problem with the Sub-Registrar's office please approach the District Registrar of your district. In Bangalore Urban district still if you have problem in registration you can visit the Office of the Inspector General of Registration where your registration work pertaining to Bangalore Urban district will be attended.
What is a Gift Deed?
A Gift Deed is a legal document that describes voluntary transfer of gift from donor (owner of property) to donee (receiver of gift) without any exchange of money. The donor must be solvent and should not use this tool for tax evasion and illegal gains. What can be gifted? Anything which qualifies as gift must have following properties 1.
It must be well defined existing movable or immovable property
2.
It must be transferable
3.
It should exist today and should not be a future property
4.
It should be tangible.
Steps in gifting process Gifting process can be subdivided into three parts as described below: 1.
Drafting the Gift Deed – A gift deed is drafted with the help of a lawyer and it describes what is being transferred and to whom. Gift Deed is a contract between donor and the donee which defines simultaneous and reciprocal act of giving and taking. A gift to be valid must be made by a person voluntarily and not under compulsion without any exchange of money.
2.
Acceptance – Acceptance of the gift after its execution is a legal requirement and Donee must accept the gift during the lifetime of donor. In case donee fails to accept the gift, it is rendered invalid. The acceptance may be validated by acts such as taking possession of the property.
3.
Registration – As per Section 123 of the Transfer of Property Act, a gift of immovable property cannot any title to the donee unless it is ed. Attestation by two witnesses is required during registration and post registration, title transfer is possible.
How to a Gif Deed? Registration of gift deed is done as per the provisions of the Registration Act, 1908. Common steps involved in registration process are: 1. 2.
Valuation of property being gifted by an approved valuation expert. Payment of Stamp duty and transfer duty – Stamp duty varies for women and men (Slightly lower for women). Stamp duty also varies from state to state and for latest rates one should visit official state government website.
In case of Minor
Legally speaking person who owns the property can make a gift to any other person. An exception to this rule is the case in which either of donor or donee is a minor. Minors are not eligible to contract; therefore they cannot transfer property as a gift. A gift deed in case of donor being a minor is legally not valid. In case of donee being a minor, a natural guardian can accept a gift on his behalf. Guardian acts as a manager of the gifted property, and if the gift is onerous, the obligation cannot be enforced on donee until he/she is a minor. Once the donee is an adult, he must either accept the burden or return the gift. Pros and Cons of Gift deed over Will
Pros
Cons
1. It is executed during the life time of donor 1. Gift deed is irrevocable post and transfer happens immediately whereas execution but “Will” can be changed “Will” is applicable after death. as many times as you want. 2. Gift deed needs to be ed; only then it 2. There is extra cost in the form of is effective. Registration renders it less liable to Stamp Duty in case of Gift Deeds. litigation. “Will” on the other hand is prone to Stamp duty varies from state to state. litigation. 3. Transfer using gift deeds are tax free in the hands of donor and donee.
Only ed Gift Deed of Property Is Valid It is invalid if a gift of a property is not ed. Documents should be stamped and ed as required, and attested by two witnesses. A Gift Deed is a legal document that states how much you received, from whom and when. Any person who is competent to contract can gift his property. The person transferring the property is called the donor and the person accepting the gift is the Donee. A minor cannot be a donor but can be a Donee. If the property is gifted to a minor, on behalf of a minor, a natural guardian can accept a gift containing a condition that the person nominated in the gift deed will act as a manager of the gifted property. The person making the gift and the one receiving must both sign the gift deed. Valid Gift of Immovable Property
A gift of immovable property, which is not ed, is bad in law and cannot any title to the Donee. A valid gift of property can be made only by a ed instrument. According to section 123 of The Transfer of Property Act, it is invalid if a gift of a property is not ed. Documents should be stamped and ed as required, and attested by two witnesses. There are some conditions to be met to make a gift of property valid as specified by the Transfer of Property Act. Following are the conditions to be met to make a gift of property valid. 1. A transfer of property must be voluntary and made gratuitously. 2. It must satisfactorily appear that the donor knew what he was doing and understood the contents of the instrument and its effect. 3. Documents should be stamped and ed as required, and attested by two witnesses. 4. A valid gift of property can be made only by a ed instrument. 5. The Person to whom the property is being transferred (Donee) must accept the property during the lifetime of the donor. If the Donee dies before accepting the gift, the gift becomes void. 6. A minor cannot be a donor but can be a Donee. If the property is gifted to a minor, on behalf of a minor, a natural guardian can accept a gift. 7. If the gift is onerous, the obligation cannot be enforced against him while he is a minor. But later, he must either accept the burden or return the gift.
8. The gift of property must be without any consideration, absolute and unconditional except when made for a specific purpose. If there is any consideration in any shape, there is no gift. 9. Any person who is competent to contract can gift his property. Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is sound mind and is not disqualified from contracting by any law to which he is subject. 10.The person offering the gift and the one receiving must both sign the gift deed.
Gift deed procedure There is no specific procedure to receive a gift. But do accept the gift in writing. You can do this via a gift deed. According to section 123 of The Transfer of Property Act, it is invalid if a gift of immovable property is not ed. Immovable property is a legal term that encomes land along with anything permanently affixed to the land, such as buildings. Gift deed of immovable property compulsorily ed and the transfer must be effected by a ed instrument signed by or on behalf of the donor, and attested by at least two witnesses. A Gift Deed may be executed to the Blood Relations and Third Parties. However, the Person to whom the property is being transferred (Donee) must accept the property during the lifetime of the donor. If the Donee dies before accepting the gift, the gift becomes void.
Gift deed Documents Following are the list of documents (enclosures) required to be produced at the time of presentation of the document before the jurisdictional Sub-Registrar.
An Identical copy of the Gift-deed containing name and details of Donor and Donee, property Details and property value in the prescribed format of Gift Deed.
Statement of particulars of property and its market value.
Parent Document (prior to title deeds)
Title Deeds to show how the Donor gets the property.
Encumbrance Certificate of the property
Affidavit which state that Registration of this document does not violate the notification issued under Section 22A of the Registration Act, 1908.
Extract of assessment of the property.
If the property is an agricultural land, No objection certificate from Tahasildar. A gift is the transfer of property by one person to another made voluntarily and without consideration. In order to constitute a valid gift, a basic requirement is acceptance. If a document of gift, after its execution or registration in favor of the donee, is handed over to him by the donor, it amounts to a valid acceptance of the gift. The gift must be an existing property. It cannot be a future property. Section 126 of the Transfer of Property Act provides that a gift may be revoked if some conditions are met. The donor and donee must have agreed that the gift will be suspended or revoked on the happening of a specified event. A gift which was not based on fraud, undue influence, misrepresentation or an onerous one, cannot be cancelled unilaterally. Such a gift deed can be cancelled only by resorting to legal remedy in a court of law. Gift Deed Is Invalid Without Registration A gift deed or Deed of gift is a deed that is executed and delivered in which the Donor transfers title to the Donee without any payment or considerations. A gift deed that has not been ed does not any title of ownership of the property in favour of the donee.The person who transfers the property is called “Donor” and the person to whom the property is being transferred called “Donee”. A transaction of gift will be complete, only if the donee accepts the gift during the lifetime of the donor. A gift deed is made voluntarily and without consideration. Any person who is the legal owner of a property can make a gift of his property.
Conditions for Valid Gift Deed
There are some conditions to be met to make a gift of property valid as specified by the Transfer of Property Act. Any person who is the legal owner of a property can make a gift of his property but a gift by a minor is void. Following are some points that need to be considered while drafting a gift deed to make a valid gift of property.
Gift Deed: According to section 123 of The Transfer of Property Act, it is invalid if a gift of a property is not ed. All the required documents should be stamped and ed. It should be attestation by two witnesses. A gift of property is invalid without a registration done.
Donee has to accepts the gift: The Person to whom the property is being transferred (Donee) must accept the property during the lifetime of the donor. A transaction of gift will be complete, only if the donee accepts the gift during the lifetime of the donor. If the donee dies before accepting the gift, the gift becomes void.
Gift Deed to Minor: A minor cannot be a donor and a gift by a minor will be void. If the property is gifted to a minor, on behalf of a minor, a natural guardian can
accept a gift containing a condition that the person nominated in the gift deed will act as a manager of the gifted property. While a minor may be a donee, if the gift is onerous, the obligation cannot be enforced against him while he is a minor. But later, he must either accept the burden or return the gift.
No Consideration: Love, affection, spiritual benefit and many other factors may enter in the intention of the donor to make a gift but if there is any consideration in any shape, there is no gift. The gift of property must be absolute and unconditional except when made for a specific purpose.
Invalid Gift of Property A gift deed or Deed of gift is invalid or void if it is not ed or executed. Other conditions that make a gift deed invalid or void are following.
The deed is executed and delivered by a minor.
The deed is not signed by the donor, donee or attested by witnesses.
The donee fails to accept the gift during the lifetime of the donor.
A conditional gift and the condition is not fulfilled.
The donee dies before acceptance, the gift is void.
The property transferred or gifted for consideration.
A gift of a thing to two or more donees, of whom one does not accept it, is void as to the interest which he would have taken had he accepted.
Steps Involved in Transfer of Property in Gift Deed
Execution of the gift deed
Donee’s acceptance of the gift (Acceptance can be express or implied)
Payment of adequate stamp duty and registration of the property
Handing over of possession of the property
Mutation of the property in the municipal records by donee in his name, if required.
Revoking a gift
Section 126 of the Transfer of Property Act provides that a gift may be revoked if the donor and donee may agree that on the happening of any specified event which does not depend on the will of the donor a gift shall be suspended or revoked. Such an event must not depend on the donor’s will. The condition should not be illegal or against the estate created under the gift. A gift which was not based on fraud, undue influence, misrepresentation or an onerous one, cannot be cancelled unilaterally. Complete absence of monetary consideration is an important prerequisite. The transfer of property must be voluntary and made gratuitously. It must also satisfactorily appear that the donor knew what he was doing and understood the contents of the instrument and its effect. The gift must be an existing property. It cannot be a future property. Any person who is the legal owner of a property can make a gift of his property. If the property is gifted to a minor, a natural guardian can accept a gift containing a condition that the person nominated in the gift deed will act as a manager of the gifted property. Do you have to pay Income Tax on Gifts Received ? Rules and Exemptions ! Do you know that, when some one deposits some money in your bank , what is its taxation angle ? A lot of people take some loan from their friends for few months and then return it back, but never think twice about it from taxation angle? Your parents deposit some money to your bank because you want to pay the down payment of your house. While it’s a help from your parents, have you ever thought if you have to pay tax on that amount or not? In this article lets see all the aspects about these kind of transactions, when money comes and goes out of your bank and what are the rules for income tax on gifts received from relatives or other people in India . Let us first see what kind of situations we are talking about ?
You swiped your credit card for your friend Rs 20,000 purchase and then your friend paid back money to you by transferring it to your bank .
You asked Rs 50,000 from your friend as loan and paid him back after 1 month.
You got Rs 50,000 cheque from your relative on your wedding.
Your father transferred some money you your bank as help for some purpose.
These are few instances, which happens in our lives. But its very important for you to understand the tax implications in various scenarios and the possible issues which can come up in the future, if income tax department decides to scrutinize your income tax returns for example. By understanding the gift tax rules and precautions to take, you will be safe. So now, let’s look at 5 points which will help you understand rules about incomes tax on gifts in a better way. By virtue of Section 56(2), any sum of money exceeding Rs. 50000 received without consideration by an individual or an HUF from any person is chargeable to tax as income under “other sources” subject to some exclusions . Below we are going to see all those exclusions and gift tax rules.
1. Upto Rs 50,000/year is not taxable The first major rule which every person should know is that there is no tax to be paid on gifts received (cash or kind), if the amount of the gift is upto Rs 50,000 in a year. However if the total amount crosses Rs 50,000 . Then you will have to pay the tax on the total amount recieved (not additional). For example – If a friend of yours gifts you Rs 30,000 in a given year, you don’t have to pay any tax on that amount, as its below the limit of Rs 50,000 . Now suppose you also get Rs 20,000 after that, still you don’t have to pay the tax as the total worth of the gift you got in the year was Rs 50,000 till now (less than the limit of Rs 50,000) . But now, if someone gifts you another Rs 10,000 . Your total gifts in a year is Rs 60,000, so you will have to pay tax on the total amount of Rs 60,000 , not just on additional Rs 10,000 . This Rs 60,000 will be included in your income and you will have to pay tax on this Rs 60,000, as per your tax slab. Note that this is exactly how the written law is. Since 1/10/2009, Section 56(2) has been amended and the scope of ‘’gifts’’ will include even immovable properties or any other property besides sums of money under its ambit. 2. Any amount received by relatives is not taxable at all Another rule for income tax on gifts, is that any amount received from specified relatives is totally tax free in the hands of recipient. So if a relative gives you gift in form of cash/cheque or in consideration, you will not have to pay any tax on the amount received. Following is the list of relations which are considered as “relatives” for this
Your spouse
Your brother or sister
Brother or sister of your spouse
Brother or sister of either of your parents
Any of your lineal ascendants or descendants
Any lineal ascendant or descendant of your spouse
Spouse of the persons referred in above points
Example – So if you want to buy a house and your father/mother/sister/brother etc transfer Rs 20 lacs to your bank . You don’t need to worry about the taxation part, because its a gift from your relatives and you will not have to pay any tax on this amount. However its a good practice to do the documentation for this, if the amount if pretty big like in this example. All you need to do is document this transaction on a paper which clearly states that who transferred the money and the reason for it, along with the signatures of both parties. In future, if there is any income tax scrutiny, this small piece of proof will be handy and will help you a lot.
Important – Note that, there is no income tax to be paid on the money received from relatives, however at times income clubbing provisions may apply, for example, if a husband gifts Rs 10,00,000 to wife, there is no ta to be paid by wife on Rs 10 lacs received, however when she invests that money and if any interest income is generated, it will be clubbed with husband income. Read all about income tax clubbing rules here. 3. Any amount received as Wedding Gift is not taxable One of the few advantages of getting married is that any amount you get, as wedding gift is not taxable in your hands, either from relative or non-relative . So even if you get Rs 1 crore as wedding gift from someone in your wedding, it’s not taxable in your hands. Lets see some examples Suppose if your spouse parents give you some gift worth Rs 10 lacs on marriage, it will be treated as a wedding gift and will not be taxed. However, it is not clear by provision, whether the gifts should have been on the exact date of marriage, or a few days before or later. Normally, it should be sufficient if the gift is given just on the occasion of the marriage, means either on the day of the marriage itself or a day or two before or after. Practical common sense view would prevail in such cases.
4. Gift Tax on Movable/ Immovable properties There is a valuation aspect involved in gifting of immovable properties
If the property is gifted without any consideration then if the stamp duty value exceeds Rs. 50000/-, stamp duty value will be taken
If the property is gifted for a consideration, then the actual value of the property will be taken
In case of other properties:
If gifted without consideration and fair market value exceeds 50,000, then the fair market value will be taken as the final value
If gifted for a consideration and the Fair Market Value (FMV) less consideration is greater than 50000, then the FMV less consideration amount will be taken as the value of the gift.
5. No tax on the amount received through WILL or Inheritance When any sum of money or any property is received under a will or by way of inheritance, it is totally exempt from Gift Tax. So if you get a real estate worth Rs 50,00,000 and some other things worth Rs 30,00,000 through inheritance , you will not have to pay any tax on that amount received. Be cautious about the take and give transactions
At times, we ask for money from our friends for some purpose and then give it back. One of the examples I can give is what I heard from one of the readers in comments section. He swiped his credit card for a friend for Rs 50,000 and then asked his friend to pay him back through online banking. Here if you see, the amount came to his , however it was a reverse transaction and not actually a gift, so ideally this transaction should not be considered at all. If its a small amount and can be justified with proofs, there is not much to worry about this. But in this case, lets say there is a income tax scrutiny, and tax inspector asks you about this “Rs 50,000″ coming to your . Now – You can clearly say that the money you got from your friend was a amount which you got back because you paid Rs 50,000 to him through your credit card. But just saying this will not be enough, He will ask you to prove it. Then you will have to bring your credit card statement, and prove to him that this was done by you for your friend and no one else. The point here is – no matters how truthful you are, there should be something you can show to income tax officers in case this is questioned. So for any transaction like this, which involves a big amount, its always a good idea to have a proof, like in the example I just gave, the credit card statement will be handy along with a small note, where you friend signs saying that you swiped your credit card for him and he will pay back the money through netbanking. In this same case, If you cant prove that this money was just a “reverse entry” , you can imagine the situation. Even if you were clean, the whole amount would be added to your income and you need to pay income tax based on your tax slabs on the ground of uned income. Another point, worth nothing is that just because you have a reverse transaction, the other party can get into trouble. For example, suppose you give Rs 20 lacs to your friend, who wanted the money for buying a house and then your friend gives back those Rs 20 lacs in 3 months. Note that now there is a clear entry that you gave your friend Rs 20 lacs, so in future income tax department can reach you through your friend and ask you about this Rs 20 lacs and from where you got so much of money. They can ask you to justify the source of this money. So always keep these points in your mind. How to document Gift transactions, ed Deed or plain paper? A gift deed is a deed, that is executed and delivered in which the donor transfers title to the receiver without any payment or considerations. It a document which transfer the legal title of the property to the donor, where the consideration is not monetary but is made in return for love and affection. There is indistinctness with respect to compliance of the gift deed at times, Whether a gift deed is required to be made in every circumstance When it is required to be stamped OR get ed? Gift made by way of cash or cheque does not mandatory requires to be executed through a gift deed. Writing a plain typed note on a paper will generally suffice. It is not required to be stamped and registration is also not needed. You may simply mention the names of persons, their relation and that the gift is being given out of love and affection.
Gift made by way of movable property is required to be made in stamp paper and stamped by the notary or court, and registration of gift deed is not required in this case. For the purpose of making a gift of immovable property, the transfer must be effected by a ed instrument signed by or on behalf of the donor. Gift of immovable property which is not ed is not valid as per law and cannot any title to the receiver.
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