Want to gift someone a property?

Yes, Indian laws do allow gifting of a property. Under section 122 of the Transfer of Property Act, 1882, one can transfer immovable property through a gift deed. The deed should contain one’s details as well as those of the recipient. However, section 123 of the Act says gifting a property is valid only if the documents of transfer are registered with the local magistrate or the registrar. The registration is done in the presence of two witnesses.

As in the case of buying a property, you need to pay stamp duty to the registrar. State governments offer a concession on stamp duty rates if the property is gifted to blood relatives, although this varies from state to state. When the property is gifted to a person outside the family, the stamp duty is higher and is applicable according to the rules of a normal transfer of property.
But by not registering the gift deed, the gift is considered invalid. In case of a dispute over ownership, the person to whom it had been gifted cannot claim it to be his own. However, if he has lived on such a property for at least 12 years, he is naturally accepted as the property owner under the law.

What about foreign nationals??
In India one cannot gift a property to a foreign national. However, if a relative is a non-resident Indian or a person of India origin, you can gift him commercial or residential property, but not agricultural, plantation or farm land.

How about gift to a minor?
If the person to whom the property is gifted is a minor, one will have to involve his natural guardians. Once the minor attains adulthood, he or she has the right to accept or reject the gift.

Can the gift be revoked?
Once the gift deed is signed, it cannot be revoked except under special cases. For example, to curb the malpractice of dowry, the law says that a property cannot be gifted as dowry to the groom. Also, the property comes back to you if the person to whom you have gifted it dies in your lifetime and he doesn’t have any descendants. But this is only applicable if you mention this condition at the time of signing the gift deed.

Does it attract tax?
As per current tax laws, if an individual receives a gift from persons other than blood relatives worth in excess of Rs. 50,000 in a year, the whole of such gift received will be treated as the individual’s income and must be included under ‘Income from other sources.’

According to Anil Mithas, CMD of the Mithas Group “Gifting of a property in India is relatively easy as long as one cares to complete all the mandatory documentation.”

Source: www.unnatifortune.com