Legal & Documents
What is a Gift Deed?
Transferring a property to your child costs a fraction of what selling it would. It is also, once done, very difficult to undo.
The short answer
A gift deed transfers property to someone without any money changing hands. Parent to child, between spouses, or to anyone at all.
Between close relatives, stamp duty is sharply reduced in most states — sometimes to a nominal fixed sum. It must be registered, and once accepted it is generally irrevocable. That last point deserves more thought than it usually gets.
What a gift deed is
A voluntary transfer of property, without consideration. No money. No exchange. A gift.
Section 122 of the Transfer of Property Act defines it, and Section 123 requires that a gift of immovable property be made by a registered instrument, signed by the donor and attested by two witnesses.
What makes a gift deed valid
| Requirement | What it means |
|---|---|
| No consideration | No money, no exchange, no 'in return for'. Any consideration makes it a sale, not a gift — and attracts full stamp duty. |
| Voluntary | Freely given. A gift extracted under pressure can be set aside. |
| Acceptance | The donee must accept it, and must do so during the donor's lifetime. An unaccepted gift is not a gift. |
| Registration | Mandatory for immovable property. Signed by the donor, attested by two witnesses, registered with the sub-registrar. |
The acceptance requirement catches people out. If a donor gifts property and dies before the donee formally accepts, the gift can fail — and the property falls back into the estate.
The stamp duty saving
Most Indian states charge sharply reduced stamp duty on a gift between close relatives — spouse, children, parents, siblings, and in some states grandchildren.
In several states it is a nominal fixed amount rather than a percentage.
Compare that with a sale of the same property, which attracts full duty of 5–7%. On a ₹1 crore flat that is ₹5–7 lakh.
Confirm the current position in your state — the rules and the definition of 'relative' vary, and they change with state budgets.
Which is why gifting is the normal route for moving property within a family. It is not a loophole; the states created the concession deliberately.
Think carefully before you gift
You cannot change your mind. Not because you fell out. Not because circumstances changed. Not because you now need the property.
The only exceptions are narrow: where the deed itself expressly provides for revocation on a specified event, or where the gift was obtained by fraud, coercion or undue influence.
Parents who gift a house to a child and then find themselves without a home have very little recourse. This happens. It is one of the sadder categories of Indian property litigation.
If you want to transfer property to a child but retain the right to live in it, or the right to change your mind, a gift deed may be the wrong instrument. Consider instead:
- A will — takes effect on death, revocable until then.
- A gift with a reserved life interest — you transfer ownership but retain the right to reside for life. Draft it carefully, with a lawyer.
- A conditional gift, where the deed itself provides for revocation on a specified event.
Each has different tax and duty consequences. Take advice before you sign, not after.
Gift vs relinquishment vs partition
| Gift Deed | Relinquishment Deed | Partition Deed | |
|---|---|---|---|
| What it does | Transfers property without consideration — a genuine gift | A co-owner gives up their undivided share, in favour of another co-owner | Divides jointly-held property into separate, defined portions |
| Who can be the recipient | Anyone. Relative or stranger. | Only an existing co-owner. You cannot relinquish to an outsider. | The existing co-owners, among themselves |
| Money involved? | No. Consideration makes it a sale, not a gift. | Usually no — but it can be for consideration | No — it is a division, not a transfer for value |
| Registration | Mandatory | Mandatory | Mandatory |
| Stamp duty | Sharply reduced between close relatives in most states — sometimes a nominal fixed sum | Concessional in several states where between family members | Usually concessional; varies by state |
| Revocable? | No, once accepted — unless the deed itself provides for revocation | No | No |
| Typical use | Parent to child. Between spouses. | One sibling among four gives up their share to the other three | Four siblings inherit a house and divide it into four defined shares |
The distinction that matters: a GIFT can go to anyone. A RELINQUISHMENT can only go to an existing co-owner. A PARTITION divides among co-owners. Using the wrong instrument can attract full stamp duty where a concessional rate was available — an expensive mistake, and a common one.
Frequently asked questions
Can a gift deed be revoked?
Generally, no — once it has been accepted, it is irrevocable. The only exceptions are narrow: where the deed itself expressly provides for revocation on a specified event, or where the gift was obtained by fraud, coercion or undue influence. Parents who gift a house to a child and later find themselves without a home have very little recourse.
Is stamp duty payable on a gift deed?
Yes, but between close relatives it is sharply reduced in most states — in several, a nominal fixed sum rather than a percentage. Compare that with a sale of the same property, which attracts full duty of 5-7%. Confirm the current position and the definition of 'relative' in your state; both vary and both change with state budgets.
Does a gift deed need to be registered?
Yes. Section 123 of the Transfer of Property Act requires a gift of immovable property to be made by a registered instrument, signed by the donor and attested by two witnesses. An unregistered gift of immovable property is not effective.
Can I gift property to someone who is not a relative?
Yes — a gift can be made to anyone. But the concessional stamp duty applies only between close relatives as defined by your state. A gift to a non-relative typically attracts full stamp duty, as a sale would.
What if the donee doesn't accept the gift before the donor dies?
The gift can fail. Section 122 requires acceptance by the donee during the lifetime of the donor. An unaccepted gift is not a completed gift, and the property falls back into the estate. Acceptance should be documented.