Stamp Duty on Gift Deed - Rules, Considerations and Exemptions

Gift deeds are an efficient way to transfer property ownership without monetary exchange, often used for gifting property to family members, charitable organisations, or others. However, even though no money changes hands, stamp duty and registration charges are applicable. These charges vary based on state laws, the relationship between the donor and the donee, and the type of property being gifted—immovable (like land or flats) or movable (like jewellery or shares).

This guide provides a detailed breakdown of stamp duty on gift deeds, how it is calculated, state-wise rates, exemptions, and associated costs. By the end, you will also learn how to execute a gift deed, avoid penalties, and understand its tax implications.

A gift deed is a legal document used by a property owner (donor) to voluntarily transfer ownership of their property or assets to another person (donee) without any monetary consideration. It is a formalised way to document the gifting process and is legally binding once registered.

Common uses of gift deeds:

• Transferring property to family members (e.g., parents gifting property to children).
• Spousal gifts as part of estate planning.
• Donations to NGOs or charitable organisations.
• Avoiding probate by transferring property during the donor's lifetime.

Types of property covered under gift deeds:

1. Immovable property: Includes land, flats, or buildings.
2. Movable property: Includes cash, jewellery, shares, vehicles, etc.

While stamp duty regulations primarily apply to immovable property, some states may also impose stamp duty on movable assets depending on the transaction's nature.

Stamp duty is a state-level tax governed by individual State Stamp Acts, while the registration process is regulated under the Registration Act, 1908. The stamp duty rates and concessions are determined by state revenue departments, while sub-registrar offices oversee the payment and registration process.

Key points:

• E-stamping and franking: Many states now allow e-stamping for convenience and transparency. Franking is another method where the stamp duty is paid and imprinted on the document at authorised banks or agents.
• Mandatory registration: For immovable property, registration of the gift deed is compulsory to make it legally enforceable.

Stamp duty is calculated based on the higher of two values:

1. Market Value: The price at which the property can be sold in the open market.
2. Circle Rate (Guideline Value): The minimum value set by the government for property transactions in a specific area.

Rules to note:

• If the declared property value is lower than the circle rate, the stamp duty will be calculated based on the circle rate.
• Accurate valuation documents are critical to avoid disputes or penalties.

Sample calculation:

Assume a property of 1,000 sq. ft. in Maharashtra with a circle rate of Rs. 50,000 per sq. ft. and a market value of Rs. 1 crore.

• Circle rate value: Rs. 50,000 x 1,000 = Rs. 50 lakh.
• Market value: Rs. 1 crore.

If Maharashtra’s stamp duty is 3% for transfers between parents and children, the stamp duty would be Rs. 3 lakh (3% of Rs. 1 crore).

Stamp duty rates vary significantly across states, and many states offer concessions for transfers between close relatives.

Trends:

• States like Maharashtra and Karnataka offer reduced rates for transfers to blood relatives such as parents, children, and spouses.
• Registration fees are usually fixed or a small percentage of the property value.

Common exemptions:

• Transfers to immediate family members (spouse, parents, children, siblings) often enjoy reduced or zero stamp duty in many states.
• Gifts to government bodies or charitable organisations may also be exempt.

Documents required for claiming exemptions:

• Proof of relationship (e.g., birth or marriage certificate).
• Affidavits or declarations affirming the relationship between donor and donee.

Cost breakdown:

Heading type: write as a procedural checklist/table with time estimates, ~400 words.
 Writer instructions: Provide a stepwise workflow: (1) decide donor & donee details and relationship proof; (2) get the property title, encumbrance certificate, no-objection certificates (if applicable); (3) draft gift deed with clear description of property and consideration clause (showing gift); (4) stamp the deed at appropriate value (adhesive or e-stamp/franking depending on state); (5) sign before witnesses and get notarised if required; (6) present at sub-registrar with IDs, supporting docs, pay stamp + registration fees; (7) collect registered deed and update municipal/society records; (8) retain certified copies and update revenue records/mutation. For each step, give estimated time (1–3 days for docs, registration slots may take longer). Include a short reminder: certain registrars may insist on original title or NOCs from lenders. Cite Kanakkupillai and ClearTax for procedural steps. (Kanakkupillai)

H3 — Documents required (short checklist)

Writer instructions: List essential documents (title deed, encumbrance certificate, Aadhaar/PAN of donor & donee, proof of relationship, property tax receipts, NOC from bank/association, valuations).

Stamp duty in India can be paid through three main methods — e-stamping, franking, and adhesive stamps. The accepted method varies across states, so it’s important to verify your state’s specific rules before proceeding.

E-stamping is the most widely used and preferred method in many states. It involves paying stamp duty online through an authorised portal or vendor and generating an e-stamp certificate with a unique identification number. You then print and attach this certificate to your document. It’s secure, verifiable, and convenient but requires digital access.

Franking involves visiting an authorised bank or franking centre, where an imprint is stamped on the document after payment of duty. It provides a physical proof of payment but requires an in-person visit and is subject to slot availability.

Adhesive stamps or non-judicial stamp papers are the traditional method, commonly used for smaller-value agreements. However, they are being phased out in many states due to the risk of forgery.

Under-stamping can lead to fines or make a document inadmissible as evidence. Any deficiency must be corrected through adjudication and payment of the balance duty plus penalty. Always ensure the correct duty is paid for legal validity.

Stamp and registration authorities may sometimes dispute the market value declared in your sale deed or property document. This usually happens when the declared price is lower than the circle rate (ready reckoner value) or appears undervalued compared to similar local transactions. In such cases, officials may seek to levy additional stamp duty or issue a show-cause notice questioning your valuation.

How to Avoid Valuation Disputes

To prevent such disputes, follow a proactive documentation and valuation strategy before registration:

• Obtain a Registered Valuer’s Report: Get a professional valuation certified by a government-approved valuer, stating the property’s condition, location, and market trends.
• Collect Buyer–Seller Comparables: Keep copies of recent sale deeds for similar properties in the same area to support your declared value.
• Gather Tax and Assessment Records: Include municipal tax receipts, property tax assessments, or income declarations to show consistent valuation.
• Prepare a Valuation Affidavit: Draft a short affidavit explaining how you arrived at the declared value—mention property size, age, construction type, and comparable sales.
• Maintain Receipts and Payment Proofs: Keep all payment proofs such as bank transfers or demand drafts to show transparency.

If a Valuation Dispute Arises

If the registering officer raises an objection, they may issue a show-cause notice under the state’s stamp law, asking you to justify the valuation. You can respond with your valuation documents and written explanation. If not satisfied, the case is referred to the Collector of Stamps or State Stamp Adjudication Officer for formal determination.

You can appeal this decision within a prescribed timeline (usually 30–60 days, depending on the state). If a deficiency in stamp duty is found, you must pay the balance along with a penalty, which may range from a small surcharge to multiple times the shortfall. Paying the duty promptly helps reduce penalties and avoid further litigation.

Valuation Evidence Packet – Suggested Checklist

1. Certified copy of registered valuer’s report
2. Minimum three comparable sale deeds from the same locality
3. Recent property tax assessment and receipts
4. Proof of payment (bank transfer/draft)
5. Buyer–seller affidavit on declared value
6. Supporting photographs or inspection notes

Tip: Kanakkupillai notes that maintaining consistent documentation and early valuation evidence helps avoid protracted litigation and unnecessary stamp duty penalties. Always record valuation decisions transparently before registration to strengthen your defence.

Under the Income Tax Act, gifts received from relatives are generally exempt from tax. However, gifts from non-relatives exceeding Rs. 50,000 may be taxable in the recipient's hands.

Capital gains on future sale:

If the donee sells the gifted property, the cost of acquisition for calculating capital gains will be the same as the donor’s original purchase price. Indexation benefits may apply.

Example:

• Parent gifts property purchased for Rs. 30 lakh (indexed cost: Rs. 50 lakh).
• Donee sells it for Rs. 1 crore.
• Capital gain = Rs. 1 crore - Rs. 50 lakh = Rs. 50 lakh.

Gifts between spouses:

• Typically exempt from stamp duty in most states.
• Ensure proper documentation like marriage certificates.

Gifts to daughters:

• Family law changes have strengthened daughters’ rights to ancestral property.
• Explicit documentation is advisable to avoid disputes.

Gifts to NRIs:

• Gifts to NRIs may require compliance with FDI norms and PAN/KYC documentation.

Gifts to charities:

• Ensure the charitable trust is registered under relevant laws.
• Additional paperwork may be needed for exemptions.

While stamp duty is usually linked to immovable property, it can also apply to moveable assets like cash, jewellery, or shares in specific cases. Rules differ across states—some levy only a token duty, while others accept a plain paper declaration with proper PAN and KYC details.

For cash gifts, transfers made through banks or cheques typically don’t need a stamped gift deed. However, large amounts (especially above ₹2 lakh) should be supported by a short declaration or affidavit explaining the donor–donee relationship and source of funds. For jewellery, attaching a valuation certificate and a simple gift declaration helps prove legitimacy and ownership.

When gifting shares or securities, transfers made via a registered broker or depository require KYC compliance and a transfer deed, though off-market transfers may attract a nominal stamp duty.

In contrast, small or personal gifts—like household items or low-value jewellery—can usually be documented on plain paper without stamp duty, provided the parties’ PAN and contact details are included.

As Kanakkupillai and NoBroker note, even when stamp duty is minimal, proper documentation remains essential for transparency, tax clarity, and avoiding future ownership disputes.

When a flat is transferred through a gift deed, most housing societies or co-operative associations still require a transfer application to officially record the new owner’s name. This ensures smooth updating of the society’s membership records and avoids ownership disputes.

To complete the process, start by obtaining the registered gift deed and the society’s No Objection Certificate (NOC) confirming that no dues or disputes exist. Submit KYC documents of both the donor and donee, including self-attested PAN, ID proof, and photographs. Ensure all maintenance and utility dues are cleared before applying.

Most societies levy a transfer or processing fee, typically ranging from ₹500 to ₹25,000, depending on the bye-laws and state rules. For example, Maharashtra’s co-operative housing societies usually cap it at ₹25,000. Once approved, the society updates the share certificate, member register, and provides a written acknowledgment of the new ownership.

This article includes three editable resources to simplify documentation (place downloads near related steps):

1. Gift Deed Template (Word/PDF) – Gift_Deed_Template_India_2025 with placeholders for donor, donee, and property details. Customise names, clauses, and register as per state rules.
2. Valuation Checklist & Sample Certificate – Valuation_Checklist_Sample_Report listing required proofs like valuer report, tax receipts, and comparables. Add property details and certified valuation.
3. Society Transfer Email & Checklist – Society_Transfer_Request_Template with editable email and required attachments. Insert society name, flat number, and KYC details.

Disclaimer: Samples are for guidance only—consult a lawyer before use.

Red Flags & Remedies:

• Under-declaring property value: Use a registered valuer’s report to justify fair market value.
• Incorrect donor title or encumbrances: Obtain an encumbrance certificate and verify ownership before execution.
• Missing NOC from lender/bank: If a loan exists, get a written NOC to prevent transfer rejection.
• Failure to update municipal or society records: Submit the registered deed and request ledger updates immediately.
• Missing proof of relation (for gift tax concessions): Attach PAN and relationship affidavit.
• Improper franking/e-stamp process: Always use state-authorised portals or agents.

Penalties:
As noted by ClearTax and Kanakkupillai, undervaluation or under-stamping can lead to adjudication, penalty payments, or prosecution in serious cases. Paying the deficiency with interest early helps avoid harsher action.

If the Sub-Registrar or State Authority questions your stamp duty valuation, they’ll issue a show-cause notice. Within 15–30 days, gather valuation reports, sale comparables, and tax proofs, and file a written reply (preferably through a lawyer or registered valuer). If unresolved, the matter moves to the Stamp Adjudication Officer or Collector, who decides the payable duty and penalty. You may appeal their order within 60 days to the High Court, as noted by Kanakkupillai.

Stamp duty on gift deeds is a crucial consideration when transferring property as a gift. By understanding state-wise rates, exemptions, and registration processes, you can ensure a smooth and legally compliant transfer. If you are planning to execute a gift deed, start by verifying title documents, checking eligibility for concessions, and consulting a legal expert for accurate valuation and documentation.