In Focus

A Gift Of Property Invites Stamp Duty

By Gajanan Khergamker

Very often,a property is transferred by way of a gift and it is very vital to understand the significance of the transaction,as it stands starkly opposed to a sale or a lease.Under the Transfer of Property Act, 1882, a gift is defined as the transfer of a certain moveable or immovable property, made voluntarily and without consideration,by one person called the donor, to another, called the donee and accepted by or on behalf of the donee.

For a property to be categorised as a gift, it is important that it is a voluntary transfer by a donor to the donee; it should be an existing, movable or immovable property; there should be no consideration involved and it should be accepted by the donee. In the absence of any one or more of these requirements, the transaction fails to categorise as a gift.

The transfer of the gift has to be a voluntary action,which means that the consent of the donor should be free in nature and not forced. Section 11 of the Indian Contract Act maintains that a consent is not free, if it is procured by coercion, misrepresentation, mistake, force, fraud or undue influence.

A property transfer, made in consideration of an expectation of moral and spiritual benefit, or in consideration of natural love and affection, is a valid gift. In a particular case (Munni Devi versus Chhoti), a gift deed of the property was executed by a mother in favour of her sole daughter, as she had promised to look after and maintain the mother throughout her life. The court held that the daughters promise to look after and maintain her mother was not enforceable in law,as such. This gift was made on account of natural love and affection and not in consideration of the assurance or promise of maintenance, by the daughter.

In case of a gift of an immovable property, it has to be a written instrument, duly signed by the donor and attested by at least two witnesses and duly registered. Although non-registration of the gift does not render the gift as void, it cannot be produced as evidence in the court, when it comes to the enforcement of the terms and conditions of the deed. Incidentally,the stamp duty levied on a gift of an immovable property is the same as that of conveyance and is levied on the market value of the property.

Where a gift comprises the donors whole property, the donee is personally liable for all the debts and liabilities of the donor at the time of the gift of the property, provided the donee accepts the gift. If the gift is in the form of two or more separate and independent transfers to the same person for several things, the donee has the liberty to accept one of them and refuse others, although the former may be beneficial and the latter, onerous.

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