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There are two parties in an act of gift, namely the donor and the receiver. The donor is the person who donates his or her property, and the recipient is the person to whom the property is given. The donor must have a good mind and be able to make arrangements at the time of donation. Donation: A donation is a free transfer of goods from a donor to a recipient. If agricultural land or residential property is donated, then it is Rs.200 The person who donates his property is called the donor, and the person who accepts the gift is the recipient. The donor must voluntarily give the property to the recipient without considering that the gift is valid under the law. The recipient must accept the gift during the donor`s lifetime in order for the gift to be legally valid. A deed of gift may be challenged before the courts on the basis of its legality, subject to the right of prescription and proof of its illegality. If the recipient does not accept the gift, he cannot force him to accept it.
The certificate is not valid unless the recipient reports acceptance. For the purpose of donating real property, the transfer must be recorded, signed and certified by at least two witnesses by or on behalf of the donor. Stamp duty, calculated on the basis of the market value of the property (varies from state to state), must be paid at the time of registration. Owners who donate their property should be aware of the fact that once the deed of gift is registered, the owner loses ownership of the offered property. That is, the provisions of the deed of gift, as well as a deed of sale or renunciation, come into force immediately. This does not apply to a will whose provisions do not come into force until after the death of the author of the will. According to the Law on Transfer of Ownership, the transfer of real estate as part of a gift must be carried out through a registered deed/document signed by or in the name of the person giving the property and must also be certified by at least two witnesses. Donations are taxed under paragraph 56(2)(x) of the Income Tax Act, 1961, after April 1, 2017. In accordance with Article 56(2)(x)(a), the total amount of the gift in the hands of the beneficiary is taxed under the heading “Income from other sources” if a person receives an amount of money of more than Rs 50,000 as a gift without consideration. Steps in the Donation Process The donation process can be divided into three parts as described below: 1.
Draft Act of Giving – An act of gift is written with the help of a lawyer and describes what is being transferred and to whom. The act of giving is a contract between the donor and the recipient that defines the simultaneous and reciprocal act of giving and taking. A gift to be valid must be given by a person voluntarily and not under duress without currency exchange. A deed of gift can be challenged if any of the above legal requirements for the validity of a gift transaction have not been met, such as: In the deed of sale, you give your property for money. The deed is registered and shows how much you paid for the property sold. But if it`s a gift, then it`s a renunciation of your assets without financial compensation. The government does not accept gifts between two non-parents; He earns income through stamp duty on real estate transactions. “If the recipient accepts the gifts, some of which are unpaid invoices, all charges will be deferred to the recipient. For example, if you give a property to your loved one and an invoice of Rs. 1000 is due, after the transfer of the gift, it is the responsibility of your relative to pay the fees,” says lawyer Tanuj Agrawal. The owner of a property can give it to a relative or a third party.
A donation is only considered valid if it is made voluntarily and without consideration. Both acts act as an instrument of transfer of ownership. The only difference is in consideration. In the deed of sale, the property is transferred for consideration of a certain value, but in the deed of gift, the transferor takes nothing. What happens if you want to give away your property after your death? You can take back a donation, but this aspect must be taken into account and covered in the registered deed of gift. According to article 126 of the Transfer of Ownership Act, a revocation of the transaction is not possible, unless the donor indicates in the registered contract that he retains the right to take back the gift. In the event that the recipient is a minor, a natural guardian may accept a gift on his or her behalf. The guardian acts as custodian of the donated property, and if the gift is incriminating, the obligation cannot be performed on the recipient as long as he is not a minor. Once the recipient is an adult, they must either accept the burden or return the gift. Pursuant to paragraph 56(2)(x)(b), if a person receives real estate as a gift without consideration and the value of the stamp duty on the deed of gift exceeds Rs 50,000, the value of the stamp duty on the property is taxable in the hands of the recipient. According to income tax laws, the value of all donations received by a person in a year is completely exempt as long as the sum of these donations does not exceed Rs 50,000 per year. If the combined value of all donations exceeds Rs 50,000, the sum of the gifts received will be taxable without threshold exemption.
However, income tax laws also give favorable treatment to donations between two close relatives. Therefore, the donation of property (movable or immovable) paid to certain relatives is totally exempt from tax in the hands of the beneficiary without ceiling. The list of close relatives includes the parents, spouses, siblings, siblings of the spouse, linear ascendants, and descendants of the person and his or her spouse. The list also includes the spouse of the above-mentioned persons. 3. Registration – According to Article 123 of the Transfer of Property Act, a gift of immovable property can only be transferred to the beneficiary if it is registered. Certification by two witnesses is required upon registration and after registration, a transfer of ownership is possible. For the registration of the deed of gift, the deed of gift must be written with all the clauses (as mentioned above) on stamp paper. The donor and recipient must sign on all sides of the deed of donation and must be certified by at least two witnesses. The recipient must accept the donation during the donor`s lifetime and if it is clear in mind for it to be valid.
However, the donor can only donate real estate that exists at the time of registration of the deed of gift. He cannot give the goods he expects or will receive in the future. The donor may only transfer immovable property of which he is the rightful owner. The donor must own the property of the gift at the time of the donation. If the ownership of the home is received as a gift from a parent, the first tax claim arises when you sell the property. The cost for income tax purposes is the cost paid by one of the former owners for the property. Earnings are processed in the short or long term, depending on whether the sum of your holding period, as well as that of the previous owner who actually paid it, is greater than 36 months. What is a deed of gift? A deed of gift is a legal document that describes the voluntary transfer of the gift from the donor (owner of the property) to the recipient (recipient of the gift) without exchange of currency. The donor must be solvent and must not use this tool for tax evasion and illegal profits. The deed of gift is a document that transfers ownership as a gift to another owner.
A deed of gift is only valid if it is without consideration from one family member/friend to another. It is mandatory to register the deed of gift in accordance with section 17 of the Registration Act 1908. .