Gifting property is something what elders find it suitable and deem it to be one of the precious gifts they are giving to their young ones. And definitely, they have been working for their children and always wanted to provide them the good life. By gifting property or something more precious they want to present something that their children can cherish for their lifetime. However, there are legal implications attached to it.
Let us find out what those implications are and how they are to be fulfilled.
Consider gift deed
Gift is always given voluntarily. Hence monetary benefit is not expected out of it. Property or any kind of capital asset can be gifted to either a relative or a non-relative. There are no tax implications when you are gifting to a relative but the non-relative person is required to show the gift under income from other source in his accounts in that particular year and pay tax on it, if the value of the gift is above Rs 50,000. The gifting process can be executed only through gift deed.
A gift deed is a legal document that defines the voluntary transfer of the gifted property, movable or immovable along with the details of the donor and the donee i.e. the person gifting and the person receiving the gift. As per the Indian Registration Act, 1908, the property or the immovable asset to be gifted should already be a registered property in order to get its ownership transferred in another name.
Other legal implications
Though there are no tax implications when the gift is given to one of the family members but stamp duty and registration charges are levied on the value of the gift. The registration process should be completed as soon as the property is gifted so that the legal validity can be given and ownership is transferred. The maximum period allowed for registration is 4 months. Also, while execution process is taking place two attestants should be present and sign the document. Without registration and payment of stamp duty immovable property cannot be gifted nor can its ownership be transferred.
Another most important point to be noted is that the gift given should be a voluntary process. Monetary benefit is definitely not involved in the process but the doner should be able to give it without any pressure. Even the donee should accept the gift willingly and without any pressure. If the donee is minor i.e. below 18 years of age, his/her guardian can accept the gift on his/her behalf and manage it till the minor becomes eligible.
Once the donee accepts the gift or the guardian accepts the gift legally on behalf of the donee, the pending liabilities on the property, say unpaid water and/or electricity bills, annual tax or anything due is to be now paid by the recipient.
Knowing legal implications before you consider gifting any immovable asset or property can make the process more smooth and hassle free. Do consider timely registration, payment of stamp duty and all pending dues on property before gifting it so that the recipient is able to treasure it forever joyously.