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requirement of gift deed from husband to wife

A nagpal (Practicing Professional) (236 Points)

13 January 2011

Sir I want to know whether their is any legal requirment of gift between husband and wife to be on legal stamp paper. The ITO is disallowing the cash receipts of husband deposited in the wifes Business account to meet the shortfall in balance and treating it as unexplained cash credit under section 68 on the plea the the gift deed furnished is on plain legal paper and not stamp paper.

To the best of my knowledge even a oral gift between husband and wife is sufficient.

Can any one furnish some case laws to prove that gift deed between husband and wife or direct relatives need not be on legal stamp paper. or may be even oral gifts( i.e may not be in proper format of stamp paper gift deeds._

Kindly reply urgently.

CA Anil Nagpal

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5 Replies

Sonam Bidasaria (CA) (770 Points)
Replied 14 January 2011

Generally every gift should be supported by gift deed. But practically we dont feel the need of the same while doing the transaction with the close relatives.

To get rid of any income tax proceedings, it is better to be on safe side on our part and should prepare a gift deed evidencing the genuineness of transaction.

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 14 January 2011

Originally posted by : A nagpal
	Sir I want to know whether their is any legal requirment of gift between husband and wife to be on legal stamp paper. The ITO is disallowing the cash receipts of husband deposited in the wifes Business account to meet the shortfall in balance and treating it as unexplained cash credit under section 68 on the plea the the gift deed furnished is on plain legal paper and not stamp paper. To the best of my knowledge even a oral gift between husband and wife is sufficient. Can any one furnish some case laws to prove that gift deed between husband and wife or direct relatives need not be on legal stamp paper. or may be even oral gifts( i.e may not be in proper format of stamp paper gift deeds._ Kindly reply urgently. CA Anil Nagpal

produce the husband's balance sheet with IT return of respective period to ITO where the same amount "capital is reduced by way of transfer to wife" this will resolve the matter,

practically we have to keep in mind to us bank entries for this purpose, and mere book entries face troubles.

Rajesh Kandoi (Practice) (39 Points)
Replied 09 April 2011

If the State Stamp Act imposing a stamp duty on Gifts of movable property, only when Gift Deed on stamp paper will be required.

But, in the income tax proceedings, for Gift Transactions, we have to proove,

1. Capasity of the donor

2. Genuinness of Transaction

and for prooving genuinness of transaction, evindence of BOOK ENTRY, if regular accounts are being maintained is sufficient.

Occassion of Gift like BIrthday, Anniversery are also important.

if one spouce is purchasing immovable property or starting a new business, this is also a customry reason for other spouce to contribute by way of gift.

Feroz Ahmed (1 Points)
Replied 06 November 2015

Sir, me and my wife jointly own a flat in Hyderabad. In addition to her 50% share, I would like to gift 95% of my share to her and retain just 5%. Can I do it on non judicial stamp paper duly notarised? Will it be valid? If not, who can raise objection to thiis? I mean, State Govt authorities, IT Department etc etc.can raise objection?

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 06 November 2015

Originally posted by : Feroz Ahmed
	Sir, me and my wife jointly own a flat in Hyderabad. In addition to her 50% share, I would like to gift 95% of my share to her and retain just 5%. Can I do it on non judicial stamp paper duly notarised? Will it be valid? If not, who can raise objection to thiis? I mean, State Govt authorities, IT Department etc etc.can raise objection?

it appears that you dont like to gift the FULL, but want to keep your name there also. so it will invite stamp duty and other state taxes also.

go through a registered / unregistered WILL or PROBATE for whole of your share in name of your wife, so that she will get your share smoothly after you.

If you want to handover the property to her for commercial purpose, then you can provide a Power of Attorney with terms as it suits yourself