Is gift deed necessary ?

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

26 September 2012 Dear experts,
In AY 2011-12 I gifted around Rs. 3 lacs to my father through bank cheques and Rs 50 thousands in cash. No gift deed was made at that time.
Can the gift deed be made now ?
Does a gift deed on plain paper serves the purpose ?

Querist : Anonymous

Querist : Anonymous (Querist)

27 September 2012 Dear experts,
In AY 2011-12, I gifted Rs. 3 lacs (through bank cheques) and Rs. 50 thousands cash to my father. No gift deed was made at that time. I am a salaried employee, paying tax and filing return.
1. Is the gift deed necessary in this case?
2. Can the gift deed be made now for that period?
3. Does a gift deed on plain paper serve the purpose?
4. Is there a limit up to which I can gift to my father in cash?
Thanks in advance.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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01 August 2024 Here are answers to your questions regarding the gift deed and the gifts you made:

### 1. **Is the gift deed necessary in this case?**
A gift deed is not legally required for gifts to family members under the Income Tax Act, as gifts received from close relatives (such as parents, siblings, and spouses) are exempt from tax under Section 56(2)(x) of the Income Tax Act, 1961. However, having a gift deed can be useful for documentation purposes and to establish the legitimacy of the gift in case of any future queries or disputes.

### 2. **Can the gift deed be made now for that period?**
You can certainly create a gift deed now for the gifts given in the past. Although the gift deed cannot retroactively change the fact that no deed was executed at the time of the gift, it can still serve as a record of the transaction. The gift deed should clearly mention the details of the gift, including the amount, the date of the gift, and the relationship between the donor and recipient.

### 3. **Does a gift deed on plain paper serve the purpose?**
Yes, a gift deed on plain paper can serve the purpose if it is properly drafted and signed by both the donor and the recipient. It should include the following details:
- Name and address of the donor and recipient.
- Date of the gift.
- Amount of the gift and mode of transfer (e.g., bank transfer, cash).
- A declaration stating that the gift is made voluntarily and without any consideration.

It's also a good practice to get the gift deed notarized to provide additional evidence of the authenticity of the document.

### 4. **Is there a limit up to which I can gift to my father in cash?**
Under the Income Tax Act, there is no specific limit on the amount that can be gifted in cash to close relatives (such as parents) without attracting tax. However, for transactions exceeding ₹20,000 in cash, it is advisable to use a bank transfer to avoid any complications or issues with documentation.

### Summary:
1. **Gift deed**: Not legally required but useful for documentation.
2. **Creating a gift deed now**: Possible and can serve as a record.
3. **Plain paper gift deed**: Valid if properly drafted and signed; notarization is recommended.
4. **Cash limit**: No specific limit for close relatives, but use bank transfers for amounts over ₹20,000.

Ensure you keep all documentation related to the gift, including bank statements and any correspondence, to support the transaction if required.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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