Presents, who wouldn’t wish to obtain them? Present is one thing all of us wish to obtain from our beloved ones. Giving items can unfold pleasure for each the giver and the recipient.
Present-giving is a practice that has been a part of our Indian tradition for hundreds of years. One of many elementary points of gift-giving is the flexibility to specific feelings.
Presents function tangible representations of our emotions in direction of our beloved ones, permitting us to speak love, appreciation and gratitude. These items will be within the type of sweets, money, gold jewellery and even properties (home/land). So, items will be each movable or immovable properties.
On this publish, let’s perceive – What’s a Present? What’s a real-estate property Present Deed? What are the advantages of transferring a property via a registered reward deed? Is it attainable to cancel a registered reward deed in India? What are the tax implications of gifting a real-estate property in India? (On this article, we’d be explaining the ideas associated to items of immovable property solely.)
What’s a Present?
A present is Cash or Home, Shares, Jewlery and so on. that’s obtained with no consideration, or just an asset obtained with out making a fee towards it and is a capital asset for the Recipient. It may be within the type of money, movable property or immovable property.
The particular person gifting his/her property is known as the donor, and the particular person accepting the reward is the donee. A capital asset sometimes refers to something the person owns for private or funding functions.
The pre-requisite for a present to be legitimate is – the donor should voluntarily reward the property to the donee with no consideration and the donee ought to settle for the reward throughout the lifetime of the donor.
What’s a Property Present Deed?
A Present Deed is a sort of authorized instrument via which an individual voluntarily items a movable or immovable property to a particular person.
Is Present deed obligatory for gifting money, cheque or movable properties? – In case of a movable property, it’s the will of events (donor/donee) as to whether or not they need to get the reward deed executed.
In case of immovable properties, getting Present deed executed is essential, and likewise registration of the deed is obligatory. With out the registration of Present deed, gifting an immovable property like Land, Home constructing or a Flat is taken into account invalid in India.
“Please observe that solely a registered Present deed property will be re-sold by the donee.”
The right way to get Property Present Deed Registered in India?
The alternate of cash in a transaction makes the distinction between a present deed and sale deed. In case of a present deed, no alternate of cash takes place. In case of immovable property, it’s obligatory to register the Present Deed as per Part 17 of the Registration Act, 1908.
The reward deed registration course of in India is comparatively easy, and will be accomplished in a couple of simple steps;
- Preparation of the Present Deed: The donor and donee should agree on the phrases of the reward deed, together with the main points of the property being gifted, and the phrases and circumstances of the property switch. Each of them should signal the reward deed within the presence of atleast two witnesses, who aren’t beneficiaries of the reward. (Under is the pattern format of the reward deed.)
- Pay the Stamp Responsibility & Registration expenses: The reward deed should be stamped with the suitable stamp obligation as per the respective State Govt legal guidelines. The stamp obligation varies from state to state and will depend on the worth of the property being gifted.
- In case of Sale deed registration, the stamp obligation expenses and registration charges can come as much as 5 % to 10% of the whole property value, relying on the State the property is in and the kind of buy.
- Nevertheless, if you’re transferring the title of the property to a member of the family as a “Present Deed”, the registration expenses are very low.
- Register the Present Deed: The registered reward deed should be submitted to the Sub-Registrar with jurisdiction over the property. The SRO will confirm the identification of the events and witnesses, and the property particulars, earlier than registering the reward deed.
- Acquire the Registered Present Deed: As soon as the reward deed is registered, the donor and recipient can receive a duplicate of the registered reward deed from the Sub-Registrar’s workplace.
- As soon as the immovable property is registered via a present deed, each the events can cross-check the registration particulars by acquiring an Encumbrance certificates (EC). Under is a pattern EC assertion of one in every of my properties which I’ve obtained as a Present from my grandmother.
Transferring of possession in a property via a registered reward deed is irrevocable. When you reward the property, it belongs to the beneficiary (receiver of reward) and you can not reverse the switch and even ask for financial compensation (until the reward deed has a selected written situation).
Registered Professionalperty Present Deed Vs WILL?
Getting a property transferred via a registered reward deed or WILL, each are authorized and legitimate. Nevertheless, a present deed permits the receiver (donee) to turn into the proprietor of a property through the donor’s lifetime, whereas a Will permits the receiver to be the proprietor of the property, solely after the demise of the one that has willed it.
One other key distinction between Present deed and can is, the registration of WILL will not be obligatory however registration of immovable property (vai reward deed) is obligatory to make it legitimate and authorized. A will will be simply revoked and Present deed will be revoked below particular circumstances solely.
Although Will Registration will not be obligatory by regulation, it’s suggested to take action to keep away from any future litigation by way of succession.
What are the tax implications of Gifting a Property for AY 2024-25?
In case of switch of property via a present deed, who has to pay the taxes (if any), is it the donor or the donee?
Under are the details that you need to be conscious of relating to tax implications on Presents usually (for FY 2023-24). These factors are relevant in instances the place (i) each donor and donee are residents of India and (ii) if donor is an NRI and donee is a Resident Indian.
- Presents as much as Rs 50,000 a yr: A recipient won’t be assessed to any tax if the worth of reward is lower than Rs 50,000 a yr no matter who items the cash. Additionally, it’s good to add the whole worth of all of the items obtained in a monetary yr and if the whole worth is lower than Rs 50k then it’s exempted from earnings tax.
- Presents from Kin : If you happen to obtain a property as reward from your loved ones, there isn’t a have to pay any earnings tax.
- Event : As per the provision of taxation of items, any Present obtained from any particular person on the event of the marriage will not be liable to earnings tax. There is no such thing as a financial restrict hooked up to this exemption. However taxes are relevant if items are obtained on the time of Engagement or marriage anniversary.
Associated articles :
Sale of Gifted Property & Tax implications
Property obtained on inheritance or via Presents from relations are tax-exempt. On the identical time, you (heir / Donee) are receiving them with no consideration.
Now, let’s say you want to promote this gifted property for certain quantity. On this case, your buy worth is NIL. Does this imply you don’t have to pay any taxes on re-sale of gifted property?
Every time sure property are offered and significantly when such property have been obtained by means of reward or via Will or by succession or by inheritance, then the value of acquisition of the asset might be deemed to be the fee for which the earlier proprietor (donor) of the property acquired it.
Date of acquisition by donor thought-about because the Date of Buy. So, kindly observe that the date or yr of inheritance / receiving the reward are of no significance in capital acquire tax calculations. (Learn extra @ Sale of Inherited (or) Gifted Property & Tax implications on Capital Positive factors)
Property Present Deed & FAQs
Under are among the FAQs on transferring the property via a present deed;
- Can the property reward deed be registered within the identify of a minor? – In case the property is presented to a minor, the authorized guardian should settle for it on the minor’s behalf.
- Can a present deed be cancelled by the donor? – As soon as registered, a present deed cannot be revoked unilaterally. It will need to have the signature and consent of the donee (receiver) as nicely.
- Who pays the Stamp obligation on a registered reward deed? – Donee usually pays the stamp obligation for the registration of reward deed.
- Can a property obtained as a present be offered? – If there aren’t any circumstances hooked up to the registered reward deed, the donee can promote the property.
- After the registration of property through Present deed, who’s liable to pay dues? – The donee turns into the authorized proprietor and can then have to pay all of the pending/unpaid dues and expenses, resembling electrical energy and upkeep expenses and property taxes.
- I obtained a present from my Dad and mom, do i have to declare the gifted property worth in my Revenue Tax Return (ITR)? – If you happen to get a property via a registered reward deed (whereby your PAN or Aadhaar is quoted), you possibly can present the worth of the reward obtained as ‘Exempted Revenue‘ in ITR. That is to keep away from any scrutiny by earnings tax authorities sooner or later.
- Can I add my partner as co-owner of a property owned by me via a registered reward deed? – Sure, by doing so, she will get the possession rights on the property. Co-owning a property will be useful for married {couples} as a result of if one of many companion dies, the surviving partner robotically turns into the only real proprietor of the home. So, the switch of rights turns into simple. One other benefit is that if the couple has taken a house mortgage collectively, every particular person can avail of the tax advantages.
- What if you wish to reward your property after your demise? – If you wish to reward your property after your demise, it’s good to make a Present Deed throughout your lifetime. Your authorized inheritor (donee) or your authorized consultant can get it registered after your demise.
- Can a mortgaged property be gifted? – As per Part 128 of the Switch of Property Act, a donor can reward a mortgaged property. Nevertheless, the donee (receiver of the reward) might be personally responsible for all of the money owed and liabilities which are related to that property.
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(Submit first revealed on : 03-Aug-2023)