Gift deed registration in Shimla, Himachal Pradesh – charges, process, documents

Overview of Gift deed registration in Shimla, Himachal Pradesh

We all love to receive gifts. Gifts represent the mutual affection & respect among people for each other. But, to ensure their legal validity, it would be a good idea to create a gift deed and get it registered under the legal provisions, especially in cases where a person gifts any immovable property to the other party. The Gift of property involves transferring the ownership of one’s property to another person by executing a gift deed.

So, what is a gift deed in Shimla, Himachal Pradesh? A gift deed is a legal instrument through which an owner of any property (immovable or movable property) effectuates the transfer of any gift to the person out of his own will without expecting or accepting any consideration in return. The owner making such a transfer is known as a Donor and the person accepting such a gift is known as a Donee.

Like a sale deed, the primary purpose of a gift deed is to enclose the details of the parties and the intention of the donor to gift the property to the donee. Executing a valid gift deed is evidence of the transfer of ownership and all rights associated with the property from the donor to the donee thus stating the Donee as an absolute owner of the property without any financial transaction.

Not only this, a gift deed is legally binding and is admissible as a piece of evidence before the Courts during a legal proceeding. Moreover, it affords legal protection to the parties in the event of any dispute that might arise in the future. Though there are generally no criteria for the eligibility to make a gift, only a natural person who has attained a majority could make a valid gift.

However, a minor is incompetent to transfer property as a gift since they are incompetent to enter a contract under the provisions of the Indian Contract Act 1872. However, they can accept gifts through their guardians who will act as managers of the property until the minor attains majority.

Himachal Pradesh is a state in Northern India that has snow-laden mountains. The state is characterized by an extreme landscape featuring several peaks and river systems. Himachal Pradesh borders Punjab, Haryana, Ladakh, and Jammu Kashmir. It also shares an international border with the Tibet autonomous region in China. 90% of the state’s population resides in rural areas. Major sectors contributing to the economy of Himachal Pradesh are agriculture, hydropower, horticulture, and tourism. As per the Indian corruption study 2017, Himachal Pradesh is the least corrupt state in India.
Himachal Pradesh is ranked as the second-best performing state after Kerela in India on Human Development indicators. Agriculture is the main source of income and employment in Himachal Pradesh, and 90% of the total population residing in Himachal Pradesh depends directly or indirectly upon agriculture. Agriculture employs around 62% of the total workers in Himachal Pradesh. The main cereals grown in Himachal Pradesh are barley, maize, and rice, and apple is the principal cash crop grown in Shimla, Kullu, Chamba, Mandi, and Kinnaurdistricts.
After agriculture, hydropower is one of the primary sources contributing to Himachal Pradesh’s economy. The state has vast hydropower resources because of various perennial rivers flowing there. The high-capacity hydropower plants in Himachal Pradesh produce surplus electricity for its neighboring states like Delhi, Punjab, and West Bengal. Tourism is also one of the significant contributors to the economy of Himachal Pradesh. The state has breathtaking views that attract a lot of tourists all around the world, and Himachal Pradesh is preferred for adventure tourism by many tourists.
Capital- Shimla (Summer) and Dharamshala (Winter)

The startup ecosystem in Himachal Pradesh
The state has performed very well in the state startup ranking exercise 2018, and Himachal Pradesh has taken some major reforms to develop a robust startup ecosystem. According to the state startup ranking 2018, Himachal Pradesh has been acknowledged as an aspiring leader. In November 2016, the state government of Himachal Pradesh launched its startup policy called ‘Chief Minister Startup or Innovation Projects or New Industries Scheme.’ The vision of the Chief Minister’s startup policy is to turn the educated youth into entrepreneurs and job creators.
To develop entrepreneurial spirits in the young generation, the government of Himachal Pradesh is trying to build a strong and supportive startup ecosystem. Department responsible for building a strong startup ecosystem in Himachal Pradesh is the department of industries, and the Nodal Officer responsible for this task is the principal secretary (industries). To build a robust startup ecosystem, the state government has appointed a nodal team called startup and incentive cell with five members. The team’s task is to support the development of the startup ecosystem in the state.

Top business ideas in Himachal Pradesh
Floriculture
Himachal Pradesh has a group of climatic conditions which offer opportunities for the development of floriculture. You can set up a floriculture business and develop many floriculture products like flower seeds, live plants, etc. Himachal Pradesh has an agro-climatic condition that provides an ideal environment for the development of flowers and doesn’t need any additional planting material like expensive heating and cooling systems in the greenhouses. The floriculture business requires a considerable amount of investment and energy.

Fruit farming
Agriculture is the primary source of employment in Himachal Pradesh, and the fruit cultivation business is one of the best options for the startup. The vast tracts of land available in Himachal are perfectly suitable for growing fruits. Fruits farming is profitable and good for the environment as it helps prevent soil erosion and provides employment to the people. To set up a fruit farming business, you need a reasonable investment.

Photography
Shimla has beautiful views, and the natural beauty of Shimla attracts a lot of tourists. You can set up a photo studio in Himachal Pradesh. Many people prefer Himachal Pradesh for their pre-wedding photoshoot or destination wedding so by setting up a photo studio in Himachal Pradesh there are more chances of getting hired by them. Besides this, photographers work as freelancers, so if you are someone who likes to be their boss, then the photography business is undoubtedly meant for you.

Restaurant
If you have any idea about traditional Himachali food, you should open a restaurant in Himachal Pradesh. The traditional cuisine of Himachal Pradesh is very famous among tourists, so by opening a restaurant in Himachal, you will be able to express the Himachali culture to other people. For setting up a restaurant, you need a lot of capital for investment, and you should be able to run the business for at least six months without any profits.

Transport
Being a famous tourist site Himachal Pradesh attracts a lot of tourists. You can start a transport business in Himachal Pradesh and rent a two-wheeler or four-wheeler to tourists for exploring the state. Generally, the tourist prefers to explore the state in two-wheelers to enjoy the natural beauty of Himachal Pradesh to its fullest. For setting up transport businesses in Himachal Pradesh, you need reasonable investment, and you can start this business with two or three vehicles.

Hotel
Tourism is among the main sources of income and employment in Himachal Pradesh, so opening a hotel business for tourists is a good idea. People visit Himachal Pradesh for tourism, religious tourism, Heritage tourism, Eco tourism, and adventure tourism. So, opening a hotel in Shimla will help you in making huge profits. For setting up a hotel in Himachal Pradesh, you need a lot of investment, but once the business is established, it will be profitable. The government of Himachal Pradesh is also promoting tourism in the state which means that more tourists will come to Himachal Pradesh in search of hotels. Besides this, the state government exempts you from luxury tax if you open a hotel in the tribal area of Himachal Pradesh.

Essentials of a Gift Deed in Shimla, Himachal Pradesh

The provisions related to the transfer of property are governed by the provisions of the Transfer of Property Act, 1882, which prescribes the essentials of a gift deed in Shimla, Himachal Pradesh as provided below-

i. The gift should be made out of the free will and affection of the donor towards the donee in his lifetime. Further, the donee must accept the gift within his life for its legal validity.

ii. In case the gift is an immoveable property it must be attested and registered compulsorily.

iii. With a gift deed, the lawful owner of a property (donor) can transfer it to another party (done) without any monetary consideration.

iv. A gift deed must be executed out of love and affection towards the donee without any consideration in return.

v. The gift of immovable property will be effective when the gift deed is registered with the appropriate Registrar or Sub-Registrar. The gift of movable property is effective when the gift deed is registered or by delivery of the property. When the gift deed is registered, the transfer of the property from the donor to the donee takes place immediately, and the parties need not go to court for its execution.

vi. The donor must be a major at the time of transfer of property through gift deed;

vii. The subject of the gift (i.e. immovable property) must exist and should be free of any existing claim.

viii. The property should be registered under the provisions of the Indian Registration Act, 1908 to the sub-registrar having jurisdiction over the area of its location.

ix. The donor should be financially sound at the time of making the gift deed and should not intend to use it as a tool for tax evasion and illegal gains.

Gift Deed vs Will in Shimla, Himachal Pradesh– What is the difference?

Which properties could be transferred through a Gift Deed in Shimla, Himachal Pradesh?

Any movable or immovable property could be transferred through a gift deed by its lawful owner. However, the donor can only transfer properties that he holds lawfully at the time of execution of property and not any property he expects to receive ownership of in the future.

Immovable property has been defined under the Transfer of Property Act 1882, as either land or any direct benefits arising out of land or everything attached to the earth but does not include crops, grass, or standing timber.  On the other hand, properties that do not come under the definition of immovable property are movable property.

What is the process of Registration of a Gift Deed in Shimla, Himachal Pradesh?

As provided above, registration of the immovable property in Shimla, Himachal Pradesh is mandatory under the Transfer of Property Act 1872. Section 123 of the Transfer of Property Act 1882 states that any gift of immovable property shall be valid only when it is registered through a gift deed signed by both the parties and attested by at least two witnesses. Provided below is the step-by-step process to register a gift deed under the provisions of the Indian Registration Act 1908-

i. Drafting the Gift Deed in Shimla, Himachal Pradesh – The first step of registration of a gift deed is to draft a gift deed that could be drafted effectively by taking the support of a legal professional who would specify the name of the donor and the donee and other details. To ensure its validity, a gift must be made voluntarily without any consideration that should be stated in the deed.

ii. Acceptance of Gift in Shimla, Himachal Pradesh – Next, the donee must have accepted the gift during the life of the donor. Any failure to communicate acceptance of the gift may render the gift invalid.

iii. Registration of the Gift Deed in Shimla, Himachal Pradesh – Finally, it is mandatory to register a gift of immovable property (voluntary in other cases) to register a gift deed for effectuating its transfer. Further, it will also require attestation by at least two parties during the process of registration and post-registration.

• Next, the property subject to the gift deed must be assessed by an approved valuation professional at the office of the Sub-Registrar;
• Find out the applicable registration fee & stamp duty charges with the help of a professional lawyer or through the official state website. The stamp duty charges vary from state to state as the rates are comparatively lower for women applicants.
• Make a payment of the applicable charges and get the gift deed submitted to the District Sub-Registrar having jurisdiction over the location of the immovable property gifted.
• Finally, registration of the gift deed accompanied by the delivery of the deed with the property to the donee completes the process

What are the crucial clauses to be included in a Gift Deed in Shimla, Himachal Pradesh?

i. Details of Parties – The gift deed must provide the names & other details such as name, address, and the relationship between the donor and donee including the intention of the donor.

ii. Consideration involved – The gift deed must state that the donor intends to transfer out of his free will and affection towards the donee and there is no consideration involved in the transaction.

iii. Voluntary Transfer – The gift deed should compulsorily mention that the donor is transferring the property and is doing so voluntarily without fear, coercion, or threat from the other party.

iv. The intention of Delivery – The gift deed should have the indication of the intention of the donor about delivery of the possession of the gift property, either expressly or impliedly.

v. Ownership of Property – A gift deed should describe the property including the fact that the property is in existence in present. The donor is the sole & absolute owner of the property and has delivered the possession of the gift property to the receiving property.

vi. Rights of the Parties – The gift deed should also prescribe the respective rights of the donor & donee in pursuance of the transfer such as taking proper care & periodical maintenance of the property, enjoying the property, or mortgaging the property.

vii. Acceptance by Donee – The gift deed should state that the donee has willingly accepted the gift of the property and has acquired ownership.

viii. Revocation – Though, it is not necessary to have a revocation clause, the parties may mutually decide whether or not the gift deed would be revocable to avoid any conflict in the future.

Documents Required for Registration of Gift Deed in Shimla, Himachal Pradesh

• Copies of the proof of the identification of parties such as PAN, Aadhaar, Driving License, etc.
• Original documents related to the ownership of property.
• NOC, in cases where the property is agricultural land.
• Copy of affidavit affirming the legitimacy of the deed as regulated under section 22A of the Registration Act, 1908

What are the Tax Implications of Gift Deed in Shimla, Himachal Pradesh?

Gifts of immovable property in Shimla, Himachal Pradesh are taxable under section 56(2)(x) of the Income Tax Act, 1961. Therefore, sub-clause (a) to section 56(2)(x), whenever a person accepts a sum of money exceeding Rs.50,000 without any consideration in form of a gift, the whole sum will be taxed in the hands of the recipient under head ‘Income from other sources.

But, where a person accepts an immovable property without consideration as a gift and the value of stamp duty value of the gift deed exceeds Rs.50, 000, then an amount equal to the Stamp duty value shall be charged as tax from the donee.

However, there are certain exceptions to the taxability of gifts fulfilling which no tax shall be levied on the donee, which have been provided below-

• Where the gift has been received from any relative;
• The gift is received on some special occasions such as the marriage of the donee, or
• The gift is being received in pursuance of a will or through inheritance, or
• The gift is being received in contemplation of the death of the donor, or
• The gift is being received from a local authority as provided under the provisions of the
• If the gift is being received from any fund, university, foundation, other educational institution, other medical institution, hospital, trust, or institution as defined under the provisions of Section 10(23C) of the Income Tax Act,
• If the gift is being received from any trust or charitable university as provided under section 12A or 12AA, or
• If the gift is being received by a person from a private trust solely created for the benefit of the relative of the donee.

Can a gift deed be revoked in Shimla, Himachal Pradesh?

Generally, once registered it is not possible to revoke a gift deed, but there is one exception to this rule. If the donor expressly reserves the right to revoke the deed under any specific circumstances or at any certain point of time and the donee accepts the gift with the condition, it could be revoked under the provisions of section 126 of the Transfer of Property Act, 1882.

Further, section 126 of the Act also specifies the ways of revocation of a gift, which includes-

i. Revocation by mutual agreement between parties in Shimla, Himachal Pradesh.

ii. Revocation by rescission as a contract in Shimla, Himachal Pradesh.

i. Revocation by mutual agreement in Shimla, Himachal Pradesh

If the parties have agreed mutually to revoke the deed on happening at a certain event or a certain point in time, then the gift deed shall be revocable. However, to ensure its effect the conditions should be specified along with the fact that non-compliance with the conditions would lead to termination of the agreement and the donor may revoke the deed.

Even if the parties fail to mention the condition in the deed but state the condition in a separate mutual agreement which must be part of the transaction of the gift. In such cases, the condition shall be valid and legally enforceable.

However, one of the parties should not call for the revocation of the deed unless the same was based on any fraud, misrepresentation, undue influence, or the property being an onerous one unilaterally. Even if the gift was received due to the before-mentioned reasons, the onus of proving such fraud or misrepresentation, undue influence, or was onerous shall be on the person who challenges the Gift Deed.

ii. Revocation by the cancellation of contract in Shimla, Himachal Pradesh

The very basis of the creation of the gift deed is based on the fact that the gift should be made out of the free will of the donor and not due to any coercion or undue influence. Thus, if the donor could prove that there was no free consent towards making the gift, the gift deed will be revoked by the cancellation of the contract. In other words, a gift deed should be in the nature of an express or implied contract, under which an offer is made by the donor and accepted by the donee. If the contract itself is withdrawn or revoked by one part, there seems no question of a transfer of property taking place under the gift deed.

However, one of the parties should not call for the revocation of the deed unless the same was based on any fraud, misrepresentation, undue influence, or the property being an onerous one unilaterally. Even if the gift was received due to the before-mentioned reasons, the onus of proving such fraud or misrepresentation, undue influence, or was onerous shall be on the person who challenges the Gift Deed.

Conclusion of Gift deed registration in Shimla, Himachal Pradesh

Consequently, the subject matter of gift & drafting a gift deed has been in existence for ages and it has been governed under the rules, regulations, and procedures regarding the Gift lay down in the Transfer of Property Act, 1882. For an effective transfer all the conditions i.e. transfer of certain existing moveable or immoveable property made out of the free will of the donor and without any consideration in return. The donor must be legally competent to effectuate the transfer of property through a gift deed in the lifetime of the donee, otherwise, it would become void in effect. A gift deed must be registered and duly stamped in the office of the sub-registrar. Finally, a deed of the gift once executed and registered, shall not be revoked unless the lifetime of the donee.