Stamp Duty on Gift Deed: Rules, Charges and Tax Implications

Stamp Duty on Gift Deed is a crucial legal requirement when transferring property ownership without monetary consideration in India. Whether gifting property to family members or others, understanding applicable stamp duty, registration charges and tax implications helps avoid future disputes. This blog explains how stamp duty on gift deed works, state wise charges, concessions for blood relations, tax benefits and the registration process, enabling informed and compliant property gifting decisions.

Understanding Stamp Duty on Gift Deeds in India

Stamp duty on gift deed is a mandatory statutory charge levied by state governments to legally validate the transfer of property through gifting. A gift deed stamp duty ensures that the transaction is recognised under law and recorded in official land records. Payment of stamp duty not only formalises ownership transfer but also safeguards the interests of both donor and donee.

What is a Gift Deed?

A gift deed is a legal document through which a property owner voluntarily transfers ownership of immovable or movable property to another person without any monetary exchange. Gift deed property transfer must be made during the lifetime of the donor and accepted by the donee. As per Indian law, registration of a gift deed is mandatory for immovable property, making it a legally binding instrument that establishes clear ownership and prevents future claims or disputes, which is particularly important for Home Loan eligibility, as lenders require clear and registered ownership before approving or disbursing a loan.

Also Read: Home Loan: All You Need to Know

Key Characteristics of a Valid Gift Deed

• Voluntary transfer without coercion or consideration
• Existence and clear identification of the gifted property
• Acceptance of the gift by the donee during the donor’s lifetime
• Complete details of donor, donee, and property
• Mandatory registration under the Registration Act
• Presence of at least two witnesses

Stamp Duty and Registration Charges on Gift Deeds: State-wise Breakdown

Stamp duty and registration charges on gift deeds are payable in India and vary across states. The amount is generally calculated on the market value of the property and may differ based on whether the gift is made to a blood relative or a non-relative. This confirms that stamp duty is payable on gift deed transactions.

Rates are indicative and subject to change. Buyers should verify current charges with the local Sub Registrar or official state portals.

Also Read: Stamp Duty and Registration Charges in Maharashtra

Special Provisions for Gift Deeds in Blood Relation

Stamp duty on gift deed in blood relation is often significantly lower compared to gifts made to non-relatives. Many state governments offer concessional or nominal stamp duty for property transfers between close family members such as parents, children, siblings and spouses. These provisions recognise the non-commercial nature of such transactions and make property gifting within families more cost effective while ensuring legal compliance.

How Stamp Duty is Calculated for Gift Deeds

Stamp duty is generally calculated as a percentage of the property’s prevailing market value or guidance value determined by the state authority. In some states, a fixed nominal fee applies when the gift deed is executed between blood relatives. Gift deed valuation may also consider property type, location and usage, making it essential to confirm the applicable valuation method before registration.

Who Pays Stamp Duty on a Gift Deed?

Typically, the donee or recipient of the gifted property is responsible for paying stamp duty and registration charges. However, the donor and donee may mutually agree on who bears the cost, provided the payment is made before registration. The agreement should be clearly understood to avoid disputes during the gift deed registration process.

Tax Benefits and Exemptions on Gifted Property

Tax benefits on gift deed transactions are governed by the Income Tax Act, 1961. While gifts may attract tax implications, several exemptions apply.

• Gifts received from specified relatives are fully exempt from income tax
• Gifts received on the occasion of marriage are not taxable
• Inherited or gifted property does not attract capital gains tax at the time of receipt
• Capital gains tax applies only when the donee sells the gifted property
• Clubbing provisions may apply in certain cases depending on the relationship

Understanding income tax gift deed provisions helps in planning tax efficient property transfers.

Document Checklist for Stamp Duty on a Gift Deed

The following documents are typically required for executing and registering a gift deed:

• Drafted gift deed
• Identity and address proof of donor and donee
• Property ownership documents
• Encumbrance certificate
• Property valuation or guidance value proof
• Passport size photographs
• Witness identity proof

The Registration Process for a Gift Deed

The gift deed registration process involves several procedural steps to ensure legal validity.

First, the gift deed must be drafted on stamp paper of applicable value. Stamp duty and registration charges must be paid as per state norms. The donor and donee must then visit the Sub Registrar’s office with original documents and witnesses. Biometric verification is completed, after which the deed is registered and the certificate issued. Maintaining proper documentation ensures a smooth and legally enforceable transfer.

Final Thoughts

Stamp duty on gift deed is a critical component of legally transferring property ownership in India. Understanding applicable charges, concessions for blood relations, tax benefits and the registration process ensure compliance and long-term clarity. With varying state rules and financial implications, informed planning is essential. Since properties received through a registered gift deed may be used for Home Loan purposes, informed planning is essential to meet lender requirements and avoid delays in loan approval or disbursement.

Apply now for Home Loan.

FAQs

Q.1. Is it mandatory to register a Gift Deed in India?

A. Yes, registration of a gift deed for immovable property is mandatory under Indian law.

Q.2. Can I avoid paying stamp duty on a gift deed by making it part of a Will?

A. No, stamp duty applies to gift deeds. A Will takes effect only after death and follows a different legal framework.

Q.3. What happens if stamp duty on a gift deed is not paid on time?

A. The deed becomes invalid and penalties may apply, along with interest and legal complications.

Q.4. Are there different stamp duty rates for movable and immovable property gifted?

A. Yes, immovable property attracts stamp duty, while movable property may not require registration in all cases.

Q.5. Can a gift deed be challenged in court after registration?

A. Yes, it can be challenged on grounds such as fraud, coercion, or lack of consent.

Disclaimer:

The content presented on this page, including images and factual information, is intended solely as a summary derived from publicly available sources. GHFL/GFL (“Company”) does not claim ownership of such information, nor does it represent that the Companies have exclusive knowledge of the same. While efforts are made to ensure accuracy, there may be inadvertent errors, omissions, or delays in updating the content. Users are strongly encouraged to independently verify all information and seek expert advice where necessary. Any decisions made based on this content are solely at the discretion and responsibility of the user. Godrej Capital and its affiliates assume no responsibility for any loss or damage that may result from the use of or reliance on the information provided herein.