by one stop realty 
Introduction
Gifting property is a thoughtful gesture, often shared among family members in India. However, it’s not as simple as handing over the keys—there are critical legal and financial factors to consider. This guide covers everything you need to know about stamp duty and tax implications for gifting property, helping you make an informed decision.
What is a Gift Deed?
A gift deed is a legal document that facilitates property transfer without financial exchange, typically between close relatives. This document, once signed and registered, legally transfers ownership and safeguards the recipient’s rights.
Understanding Stamp Duty on Gifted Property
Stamp duty is the tax payable on registering a property transfer and varies by state. In India, many states offer reduced rates for immediate family transfers, although rates increase for transfers to non-family members.
For example:
- Some states offer discounts for gifting to immediate relatives.
- For friends or distant relations, the duty is typically higher, reinforcing the importance of family-based gifting benefits.
Tax Implications on Gifted Property
Tax liability on gifted property can be a bit nuanced:
- For the Giver: Typically, no tax is incurred by the giver when transferring property through a gift deed.
- For the Receiver: Close relatives are exempt from income tax on the gifted property’s value, but if the recipient is not a close relative, the property’s market value may be taxed as “other income” under Section 56(2)(x) of the Income Tax Act.
Registering a Gift Deed
- Drafting: The gift deed should clearly define the property, the relationship between the parties, and the terms of transfer.
- Calculating Stamp Duty: Visit the sub-registrar office or consult online resources for stamp duty rates in your state.
- Registration: Complete the registration at the sub-registrar’s office with both parties present, along with required documents (e.g., identity proofs, address proof, and proof of ownership).
Conclusion
Gifting property is an impactful gesture, but it requires careful handling of legal and tax-related aspects. Ensuring a well-prepared gift deed, paying applicable stamp duty, and understanding tax implications are essential steps. By following these guidelines, you can confidently manage the process and avoid potential legal complications.
