Gift/Sale Deed

GIFT AND SALE DEED

A gift deed and a sale deed are two types of legal documents that can be used to transfer property ownership in India. A gift deed is a voluntary transfer of property without any consideration, while a sale deed is a transfer of property for a price or other consideration. Both gift deeds and sale deeds must be registered with the Sub-Registrar Office of the area where the property is located to be valid and enforceable.

Some of the main differences between a gift deed and a sale deed are:

Consideration:

A gift deed does not involve any consideration, whereas a sale deed requires a valid consideration, such as money, goods, or services.

Stamp Duty:

A gift deed attracts a lower stamp duty than a sale deed, as it is based on the market value of the property. However, the stamp duty varies from state to state and depends on the relationship between the donor and the donee. A sale deed attracts a higher stamp duty, as it is based on the agreement value or the market value of the property, whichever is higher.

Tax Implications:

A gift deed may be exempt from income tax and gift tax if it is made between certain close relatives, such as parents, spouse, siblings, etc. However, if the gift deed is made between non-relatives, the donee may have to pay income tax on the value of the gift exceeding Rs 50,000 in a year. A sale deed is subject to income tax and capital gains tax, depending on the holding period and the profit or loss from the sale of the property.

Revocation:

A gift deed can be revoked only if the donor can prove that it was made under fraud, coercion, or undue influence, or if the donee fails to fulfill any condition attached to the gift. A sale deed can be revoked only if there is a breach of contract by either party, or if there is a mutual consent to cancel the sale.

Sale deed and gift deed

Similarities

Similarities


Both are instrument of property transfer.

Similarities


Both gift and sale deed come into effect as soon as it is executed.

Similarities


Both need to be registered to have legal sanction.

Similarities


Both are admissible in a court as proof of ownership.

Similarities


Gift deed can be revoked in special circumstances. The same is true for sale deed as well.

Sale deed and gift deed

Difference

Difference


Unlike a sale deed, the donor of a gift does not receive money.

Difference


Stamp duty rates are higher for sale deed. In some states, there is no stamp duty on property gifting among relatives.

Difference


Sale attracts capital gains tax. No such tax is applicable on property gifting.

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