Gift and Relinquishment deed for transfer of Immovable property
Of the various methods for transfer of ownership rights in a property “Gift” and “Relinquishment” are two such methods. Both the aforesaid terms serve the same purpose of transfer of property, have similar implications, but the circumstances in which these are executed are different.
Gift of immovable property
Gift is defined under section 122 of the Transfer of Property Act, 1882 as being the voluntary transfer of ownership rights in a property, without any material consideration, where natural love and affection to a living person is the only consideration. It must be free, voluntary, absolute and unconditional except where it is given for any specific purpose such as educational, charitable and/or religious. Generally gift is irrevocable but in case of gift for specific purpose, the property reverts to the donor when the object fails due to events not depending on the will and pleasure of the “donor”. It must be made through a written document called “Gift deed”, duly accepted by the “Donee”, witnessed by two witnesses and the deed must be registered with the Registrar/ Sub-registrar of assurances as mandated under Section 17 of Registration Act, 1908. If the gift is made to a spouse, blood relation of either of the spouse, lineal ascendant or descendant of either of the spouse or any family member, then there is no tax implication except for the cost of the stamp paper on which the gift deed is prepared. Though there is no restriction on gift to non-relatives, such gift is taxable.
Relinquishment of right
Relinquishment of right is referred to as the surrender of one’s ownership rights and claims in a property in favor of another person. It is not defined under Transfer of Property Act,. but is an established practice. Relinquishment of right is not without any consideration, the consideration may be in the form of money, exchange of property or arrangement between family members. Relinquishment of right in immovable property also needs to be done through a written document called “Deed of Relinquishment” which must be signed by all the parties, witnessed by two witnesses and must be registered. Unlike gift, relinquishment does not enjoy tax benefits and is taxed for capital gains.
In both the aforesaid cases the “Donor” and the “Relinquisher” must not be a minor, must be mentally sound and capable of taking rational decisions pertaining to disposal of property, and must be capable to contract.
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