Gift Deeds v. Relinquishment Deeds

Date : 2021-07-07

What is Gift Deed?

A gift deed refers to an agreement between two or more people wherein a person wishes to give his assets to someone in the form of a gift. The document helps in transferring an existing moveable or immoveable property and without any consideration from one party (“donor”) to another party (“donee”).

What are the essential elements of gift deed?

The essential elements of a gift deed are a follows:
 * A Gift Deed is a legal document, therefore it must be clear and unambiguous.
 * The details of the Donor and the Donee (name, address, etc.).
 * The details of the title and ownership of the assets.
 * Details of the property.
 * Relationship between the parties, if any
 * Date and place of execution of the deed.
 * Signature of the both the parties i.e. the Donor who consents to the transfer of asset/s through Gift-deed and the Donee who accepts the gift wholly, and
 * Two witnesses (i.e. above 18)

Gift Deed Registration:

As per the Registration Act, 1908, it is mandatory to register a gift deed. A gift deed can be registered by the completing the following steps:
 * Draft a gift deed from a best consultant and lawyer in India.
 * The Donor and Donee will sign the gift deed in front of the two witnesses.
 * To submit the signed document at the Sub-Registrar's office (nearest to the gifted property). 
 * Calculate the stamp duty with help of an expert lawyer and pay the stipulated fee.
 * Get the deed attested.
The documents required for gift deed registration. They are as follows –
 * Identity proof like aadhar card, PAN card etc.
 * Documents to prove the donor has full right over the property
 * Original gift deed
 * The property value certificate

What is Relinquishment Deed?

A Relinquishment deed is a legal document that allows a person to give up on his or her legal rights over a property to another person with their consent. Whereas, a deed of release (or deed of reconveyance) is a legal document which allows a person to renounce his/her claims against a specified property. A deed of release allows the parties to release from their obligations. It is hard to find any major difference between the two. The two words may be used in different contexts but the actual meaning of the two are basically the same.

Essential Ingredients of Relinquishment Deed:

The essential ingredients of a Relinquishment Deed are as follows:
 * Title Description
 * Details of the executant and releasor
 * Details of the releasee
 * Details of the property
 * State the purpose of the deed
 * Details of the legal heirs
 * Details of share of every legal heir
 * Relinquishment
 * Authorised signatories

Documents Required for Relinquishment Registration:

 * Legal Documents of the Property
 * Registered Documents
 * A written document stating Intention
 * Details of the co-owners
 * Particulars required for a Release Deed
 * Details of the Releasor
 * Details of the Releasee
 * Description of the property
 * Details on consideration, if any.
 * Identity proofs like Driver License, Passport, etc
 * PAN card of both the parties for execution 
 * Two witnesses shall be present at the time of execution
 * Other Agreements related to the property

The Difference between Gift Deed and Relinquishment deed:

Gift Deed:

Pros: One of the major benefits is of no tax implication if an individual is gifting property to certain kinds of relatives. Although, one shall pay the stamp duty, which varies from state to state and 1-8% for immovable properties. In case, property is gifted to a non-relative, the stamp duty varies from 5-11%. 
Whereas, in case of movable property transferred to relatives the stamp duty varies from 2-8% and 3-8% for non-relatives. In case of physical shares, the stamp duty is 0.25% and if in demat form then no stamp duty is imposed.
Cons: A gift deed cannot be revoked but it can be challenged in court on grounds like coercion, fraud, the donor was of unsound mind, is a minor or if the property is held jointly.

Relinquishment Deed:

Pros: It helps in smooth transfer of one’s share in jointly-held property. It is mostly used when a person dies intestate and all legal heirs have share in the property. Also, a relinquishment deed can be drawn for monetary consideration.
Cons: It doesn’t provide tax benefits. Therefore, when property is being relinquished for monetary consideration, it will lead in capital gains for the transferor. In case, the consideration is less than the stamp duty value of the property, the difference between the two will be taxed in the hands of the buyer. Only if the property is relinquished without any consideration,then the stamp duty value of the property will be equal to its sales price.

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