Release deed

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Querist : Anonymous

Querist : Anonymous (Querist)

29 September 2010 I have a property which i am confused between release deed or gift deed.I am having an family settlement.The property will be gifted or released by a family member i.e my husband's brother's wife.Please tell me which will be less costly & what will be the tax in both the scenario.thank you

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
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29 September 2010 Release is also specie of transfer of property a Release in fact may amount to a conveyance or a gift or an exchange. If a person releases his vested right or interest in a property for consideration, it is nothing but a conveyance or sale. If he releases his vested interest without consideration but only for natural love and affection it will amount to a gift. If he releases his interest in one property in favour of another in consideration of that other person releasing his interest in another property in favour of the former, the transaction is nothing but an exchange or partition.

The description release is applied when the transfer is not of the whole property but only of an interest in it and that to in favour of another who is also interested in the property and he is not a stranger.

Releases are mainly of two types namely;

1. A form of conveyance by which an interest in land or in goods and chattals is transferred by one person to another who has already a vested interest therein and;

2. A discharge or renunciation by one person of some right of action or claim, which he has against another or against another property.

The cost of stamp duty varies state to state.

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CA Amit Joshi

CA Amit Joshi (Expert)
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29 September 2010 Agree with Shailesh ji

Querist : Anonymous

Querist : Anonymous (Querist)

09 October 2010 But which will be better in terms of money.I mean in which i will be taxed less???? & how much.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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21 July 2025 Great question! Here’s a clear comparison between Release Deed and Gift Deed in the context of family settlement, focusing on costs and tax implications:

1. Nature of Deeds
Release Deed:
Used when a person relinquishes or releases their right, title, or interest in a property in favor of someone who already has an interest in the property (often a co-owner or family member).
Typically done without any exchange of money (consideration), but it can also be for consideration.
Usually applies within family settlements or partition situations.
Gift Deed:
Transfers ownership of property from one person to another without consideration (free of cost), out of natural love and affection or generosity.
Can be given to family members or others.
2. Stamp Duty and Registration Charges
Release Deed:
Stamp duty varies by state but usually lower than sale deeds.
Some states charge stamp duty on the market value of the interest released or on the consideration, if any.
Since it’s often between family members, some states give concessions or lower rates.
Gift Deed:
Stamp duty varies by state and is generally calculated on the market value of the property gifted.
Many states provide concessions or exemptions for gift deeds executed between close relatives (like siblings, spouses, parents, children).
Registration charges also apply, generally a percentage of the property value or fixed.
3. Income Tax Implications
Release Deed:
If no consideration, generally not treated as a transfer attracting capital gains tax.
If consideration is involved (like release for money), capital gains tax may arise on the transferor’s part.
The transferee gets the property at the cost as per the original owner (cost of acquisition remains unchanged).
Gift Deed:
Gift of immovable property by a close relative (which includes brother’s wife?) is exempt from tax for the recipient under Income Tax Act (Section 56(2)(x)).
However, on subsequent sale by the donee, capital gains tax is applicable based on the original cost of acquisition.
If the donor is not a relative (as defined under Income Tax Act), the value of the gift may be taxable in the hands of the donee.
Important: The term "relative" under Income Tax is strictly defined and may not include brother’s wife (sister-in-law). In that case, gift tax exemption might not apply, and the value of the property could be taxable as income for the donee.

4. Which is More Cost-Effective and Tax Efficient?
If the donor is a close relative as per Income Tax definition (like brother), Gift Deed is generally better — minimal tax burden and possible stamp duty concessions.
If the donor is brother’s wife (sister-in-law), she may NOT qualify as "relative" for income tax exemption on gift. Hence, gift deed may attract tax in donee’s hands.
Release Deed may be better in terms of tax if it qualifies as a family settlement and no consideration is involved — but consult local laws for stamp duty.
Summary Table
Aspect Release Deed Gift Deed
Nature Release interest in property Transfer property without payment
Stamp Duty Generally lower, varies by state Varies, concessions for relatives
Income Tax (Recipient) Usually no tax if no consideration Exempt if donor is close relative; else taxable
Tax on Transferor If consideration, capital gains tax N/A
Best for Family settlement, co-owner interest Transfer to close relatives
Advice
Confirm whether brother’s wife qualifies as "relative" under Income Tax. Usually, she is not covered, so gift may be taxable.
Get professional help to draft the deed clearly stating the nature of transfer.
Check your state’s stamp duty rules and possible exemptions.

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