Is gift deed need to be registered?

Registration of Gift Deed

A very common and frequent question running in the mind of taxpayers is the gift deed needs to be registered. In this part, you can gain knowledge about various provisions relating to the registration of gift deed.

Property transfers as gift are governed by the Transfer of Property Act, 1882. A gift of a property involves transferring the ownership of one’s property to another person by executing a gift deed. The gift deed is an instrument through which the immovable or movable property transfers without consideration or inadequate consideration as a gift.

The Gift is defined under section 122 of the Transfer of Property Act, 1882, as follows

"Gift" is the transfer of certain existing movable or immovable 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.

Acceptance when to be made

Such acceptance must be made during the lifetime of the donor and while he is still capable of giving, If the done dies before acceptance, the gift is void.

The Gift is defined under section 56 of the Income Tax Act, 1961, as follows

"Gift" is the any sum of money or property received without consideration or a case in which the property is acquired for inadequate consideration.

Registration of Gift Deed - Mandatory or optional?

Registration of gift deed is mandatory or not, which is clarified under section 123 of the Transfer of Property Act, 1882, and under section 17 and under section 18 of the Registration Act, 1908, as follows.

Section 123 of the Transfer of Property Act, 1882, Transfer how effected, as follows

For the purpose of making a gift of immovable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor and attested by at least two witnesses.

For the purpose of making a gift of movable property, the transfer may be effected either by a registered instrument signed as aforesaid or by delivery.

Such delivery may be made in the same way as goods sold may be delivered.

Section 17(1)(a) of the Registration Act, 1908, Documents of which registration is compulsory, as follows

Registration of instruments of the gift of immovable property is compulsory.

Section 18(d) of the Registration Act, 1908, Documents of which registration is optional, as follows

Registration of instruments (other than wills) that purport or operate to create, declare, assign, limit or extinguish any right, title or interest to or in movable property.

So it is clarified that registration of gift deed is mandatory in the case of gift of immovable property and in the case of movable property, it is optional.