Understanding the concept of Gift Deed in India

February 3, 2025
concept of Gift Deed

By Shantam Sharma and Ritvik Kashyap

Introduction

In India, the transfer of property and assets is governed by a complex legal framework, designed to ensure clarity, prevent disputes, and protect the rights of all parties involved. While various instruments exist for such transfers, one particular method stands out for its unique nature: the concept of gifting. The act of gifting, deeply rooted in social and cultural traditions, also has significant legal implications. It plays a significant role in personal and familial wealth management. Moreover, it can have implications for taxation and estate planning. Navigating the legal aspects of gifting requires careful consideration of various factors. This article delves into the what is gift deed.

What is a gift?

In India, gifts are governed by the provisions of the Transfer of Property Act, 1882[1], which outlines the legal framework for the transfer of property through gifting.

As per Section 122 of the Transfer of Property Act, 1882[2], gift means “the transfer of certain existing moveable or immoveable 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.”

Parties to a gift deed

The following are the parties to a gift deed:

  1. Donor: The donor is the person who voluntarily transfers ownership of the property without any consideration.
  2. Donee: The donee is the recipient who accepts the gift.

Important considerations regarding Gift:

When dealing with gifts, it is essential to understand certain key aspects to ensure their legality and validity; the following are the important points to consider:

To ensure the validity of a gift, the following essential elements must be fulfilled:

  1. The donor must transfer ownership of the property to the donee.
  2. The property must be transferable in accordance with Section 5 of the Transfer of Property Act, 1882[3].
  3. The transfer should be made without any monetary consideration or compensation.
  4. The transfer must be voluntary and with the donor’s free consent.
  5. The donee must accept the gift during the donor’s lifetime and while the donor is legally capable of making the gift.
  6. The gift must consist of a specific movable or immovable property that exists at the time of transfer. The gift of any future movable or immovable property is considered as void[4].
  7. The property being gifted must be tangible.
  8. Delivery of possession is a crucial element in the transfer of the gifted property.
  9. If the donee dies before accepting the gift, the transfer is rendered void[5].

Conclusion

In conclusion, gifting in India, while rooted in tradition, is subject to a robust legal framework as outlined in the Transfer of Property Act, 1882. This framework ensures clarity and protects the interests of both the donor and the donee. As discussed, a valid gift necessitates a voluntary transfer of existing, tangible property without consideration, accepted by the donee during the donor’s lifetime. Understanding these essential elements, including the roles of the donor and donee, the necessity of free consent and acceptance, and the requirement for delivery of possession, is crucial for anyone engaging in this form of property transfer. By adhering to these legal provisions, individuals can ensure the validity and enforceability of their gifts, effectively utilizing this mechanism for personal and familial wealth management.

[1]https://www.indiacode.nic.in/bitstream/123456789/2338/1/A1882-04.pdf

[2] “Gift” defined, available at: https://www.indiacode.nic.in/show-data?abv=null&statehandle=null&actid=AC_CEN_3_20_00042_188204_1523272233671&orderno=131&orgactid=AC_CEN_3_20_00042_188204_1523272233671

[3] “Transfer of property” defined, available at: https://www.indiacode.nic.in/show-data?abv=CG&statehandle=123456789/2490&actid=AC_CEN_3_20_00042_188204_1523272233671&sectionId=44102&sectionno=5&orderno=5&orgactid=AC_CG_61_334_00040_00040_1567146670518

[4] Section 124 of Transfer of Property Act, 1882, available at: https://www.indiacode.nic.in/show-data?abv=null&statehandle=null&actid=AC_CEN_3_20_00042_188204_1523272233671&orderno=133&orgactid=AC_CEN_3_20_00042_188204_1523272233671

[5] Section 122 of Transfer of Property Act, 1882, available at: https://www.indiacode.nic.in/show-data?abv=null&statehandle=null&actid=AC_CEN_3_20_00042_188204_1523272233671&orderno=131&orgactid=AC_CEN_3_20_00042_188204_1523272233671

For more information please contact us at : info@ssrana.com