Gift deed for property in India: rules, stamp duty and tax

Quick answer: A gift of immovable property must be made by a registered gift deed, signed by the giver and attested by at least two witnesses (Section 123 of the Transfer of Property Act, 1882), and accepted by the receiver during the giver's lifetime. Stamp duty is payable under your state's law, often at a lower rate for close family. Gifts from relatives are generally not taxed as income in the receiver's hands.

Parents often gift a flat to a child, or one spouse to another. Done properly, it's simple; done wrongly, it can be challenged.

What makes a gift valid?

Under Section 122 of the Transfer of Property Act:

• It is a transfer of existing property.
• It is voluntary and without payment.
• It is accepted by the receiver while the giver is alive and able to give.

Registration and witnesses

For immovable property, Section 123 requires a registered deed, signed by the giver and attested by two witnesses. An unregistered gift of a flat is not valid.

Stamp duty

Each state sets stamp duty on gift deeds. Many give concessions for gifts to close relatives such as a spouse, children or grandchildren. Check your state's rates before drafting.

Income tax

Gifts received from "relatives" (as defined in income tax law, including spouse, siblings, parents and lineal descendants) are generally not taxed in the receiver's hands. Gifts from non-relatives above a threshold may be taxable. When the receiver later sells, capital gains are worked out using the original owner's cost and holding period in many cases. Check the current rules with a tax adviser.

Can a gift be cancelled?

Generally no, once accepted. The exceptions are narrow, such as where the parties agreed it could be revoked on a specified event not depending on the giver's will alone, or where it was obtained by fraud or coercion. For senior citizens, the Maintenance and Welfare of Parents and Senior Citizens Act, 2007 allows a transfer to be declared void if it was made on the condition of care and the care isn't provided. See [the senior citizens act](/blog/senior-citizens-maintenance-act-india).

Frequently asked questions

Is a gift deed better than a will?

It works differently: a gift takes effect now and is hard to undo; a will takes effect after death and can be changed. Choose based on what you want.

Do I need to pay tax if my father gifts me a flat?

Generally no income tax for the receiver, since parents are relatives. Stamp duty is still payable on the deed.

Can a gift deed be challenged?

Yes, on grounds such as fraud, coercion, lack of capacity or improper execution, which is why registration and witnesses matter.

Get it right

[Ask April](/features/ask-april) to explain the steps for your state, and have a lawyer prepare the deed.

This article is general information, not legal or tax advice.