As the name implies, it is a gift that generally involves an exchange of the ownership of an asset, which could be a moveable or immovable property, and is delivered by one person to another. These transactions must be documented in a Deed of Gift or in a legal document that will be signed by the Donor (the person who delivers the gift) as well as the Donee (the person who receives the gift). Such transfers must be made voluntarily and without any compensation or consideration in monetary value.

If we try to comprehend the concept legally, it’s the transfer of property through gifts and shall be executed by an official document signed by or on behalf of the individual giving the property and by the person who receives the gift. 

Provisions as per ‘The Transfer of Property Act, 1882’

According to Sec. 122 of the Act, “Gift” is the transfer of certain properties, whether immovable or moveable, made in a voluntary and non-compensation manner by one individual who is referred to as the “Donor” to another called the “Donee,” and accepted by or on behalf of the donee.

Acceptance

Acceptance of the gift is an important requirement. This acceptance must be made during the donor’s life and only in situations where they can do the same. If a valid gift is accepted, it cannot be immediately canceled except if it’s a conditional gift.

Several significant provisions in the Act are as follows:

• If the Donee dies before accepting the gift, it will be declared null and void.
• According to the Indian Contract Act, 1872, Minors aren’t eligible to sign an agreement and therefore cannot transfer property. The gift deed will be unconstitutional and null if the recipient is a minor.
• A minor can be eligible to be a donee if a legal guardian takes action in the minor’s name.
• If the gift deed is conditional, any such conditions need to be agreed upon before or at the time of executing the deed. The condition cannot be added later on in any way. 

Essential Key Elements

There are a few essential factors that make a gift deed legally valid:

1. The Donor will transfer the title of the property to the Donee;
2. The property which must be transferable under sec-5 of the Transfer of Property Act, 1882;
3. The transfer must be made without compensation or any consideration in monetary value.
4. Additionally, the transfer must be carried out voluntarily and with the full consent of the donor
5. The acceptance must be made during the donor’s lifetime and while the donor is still capable of giving.
6. The gift must be tangible.
7. Delivery of possession will be the most important element of the transfer of the property gifted;
8. If the Donee dies before the acceptance, the agreement will become null and void.

Transfer

The transfer must be made through a registered document if the gifted property is immovable. It must be signed by or on behalf of the Donor or the Donee and confirmed by at least two witnesses. The registration should also be duly stamped, and other required formalities for registration.

The Sec-17 of the Registration Act, 1908, requires the registration of the gift deed in the office of the District Sub-Registrar. If, in any event, the gift deed isn’t recorded, any transfer will in no way be legal. 

Procedure for Gift Deed Registration

In accordance with the Registration Act of 1908, these are the steps to follow when registering a Gift Deed:

1. First, the property given away must be evaluated by an approved valuation expert within the Sub-Registrar’s office.
2. The Donor and Donee must sign the gift Deed in the presence of at least 2 witnesses.
3. Then the signed deed will be filed with the District Sub-Registrar.
4. Employ a lawyer to calculate the cost of registration, including the stamp duty as well as other costs;
5. Make payment for stamp duty for gift deeds and any other charges for registration according to the valuation.
6. Finally, get the gift deed certified.

Income tax on Gift Deed

According to the Income Tax law in India, the amount of gifts given to the Donee during a fiscal year is exempt from taxation as long as the value of the gift does not exceed Rs. 50,000/-. If the value exceeds t 50,000/-, it becomes taxable without any threshold exemption.

If, however, the gift of any immovable or moveable property is made between close relatives, the gift will be exempt from tax with no upper limit. It is also stated on the list of relatives that includes siblings, parents, spouse, siblings of the spouse, lineal ascendants and descendants of any individual and their spouse. It also includes the spouse of the mentioned people.

Can you suspend or cancel a Gift Deed?

Yes, it’s possible. However, the conditions should be considered and included immediately in the gift Deed. In accordance with Section 126 of the Transfer of Property Act, 1882, revoking a gift deed is not an option unless the person who made the gift deed stipulates in the signed contract that they would like to maintain his right to retake back the gift at any time. In accordance with section 126 of the Act, it provides two ways to revoke a gift:

1. Revocation through mutual agreement between Donor and the Donee;
2. Revocation by rescission as an agreement.

Revocation by rescission as contract

A gift is an act of transfer made in a voluntary manner. If it is proven that the gift was not made with the donor’s consent, then the gift must be canceled.

According to Sec-126 of the Transfer of Property Act, 1882: “A gift may also be revoked in the cases in which it might be rescinded if it were a contract.” Additionally, Sec-19 in the Indian Contract Act says that “where consent to an agreement is caused through pressure, coercion, fraud or misrepresentation, the contract is invalid since the party’s consent was obtained. This clearly indicates that if the deed is not done voluntarily because of any reasons mentioned above, the donor may revoke the gift.

Conclusion

The idea and concept of the gift have been long-standing, and it was a distinct aspect of Property Law. Then all the rules, regulations, and procedures for the Gift were outlined in the Transfer of Property Act, 1882. There are some essentials of a gift; for instance, it is the transfer of existing property that is immovable or movable, made voluntarily and without any monetary consideration. It must transfer ownership of the property, made voluntarily by a person who is legally qualified and competent to transfer the property, and the recipient must accept the transfer. If the donor dies before the acceptance, the gift becomes void.

In addition, to make a gift, the transfer must be made by a registered instrument, signed by or on behalf of the Donor and Donee, and attested by at least two witnesses. The registration should also be properly stamped and any other official registration formalities.

Then, a gift deed cannot be canceled once registered and executed unless it complies with the mandatory requirement according to Section 126 of the Transfer of Property Act, 1882. This can be concluded by stating that the Transfer of Property Act, 1882, and its provisions is an entire code that deals with the regulations for a gift in India. Section 26 of the Act clarifies the suspension or cancellation of the gift and how it can be done.