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No Stamp duty on gifting of property between blood relatives in Maharashtra

Given the recent notification of the Maharashtra government to abolish stamp duty on gifts between relatives (Referring to the Maharashtra Stamp Act Amendment Bill 20/2015) is a welcome step and we are seeing a lot of happy faces and sighs of relief as many had kept such transfers pending or were clueless as to why a stamp duty burden needs to be borne when the property itself is not changing hands in the real sense.

Anyway, all’s well that ends well. Now that we are all eager for the notification to come into effect, let us equip ourselves as to the basics of such a gifting process. YES, it differs from a simple sale transaction...HOW? read on...

When it comes to transferring property, a sales deed may not always fit the bill, especially if you want to pass it on to relatives. In such cases, instruments like a gift deed or relinquishment deed can come to your rescue. However, blindly choosing either can lead to problems.

1. Gift deed:

This document allows you to gift your assets or transfer ownership without any exchange of money. To gift immovable property, you just have to draft the document on a stamp paper, have it attested by two witnesses and register it.

Registering a gift deed with the sub-registrar of assurances is mandatory as per Section 17 of the Registration Act, 1908, failing which the transfer will be invalid. Besides, such a transfer is irrevocable. Once the property is gifted, it belongs to the beneficiary and you cannot reverse the transfer or even ask for monetary compensation.

However, if you want to gift movable property like jewellery, registration is not compulsory. At the same time, a mere entry in an account book is not sufficient to establish a transfer. Apart from physically handing over the property, you need to back it with a gift deed. The process is slightly different if you are gifting company shares. You will have to fill out the share transfer form and submit it to the company or registrar, and the transfer agent of the firm. Once again, get a gift deed drawn and executed to complete the transfer, but the document need not be registered.

2. Relinquishment deed:

This document is quite different from a gift deed, though the legal implications are the same.

You can use this instrument if you want to transfer your rights in a particular property to another co-owner. Such a transfer is also irrevocable even if it is without any exchange of money. As with all documents related to the transfer of immovable property, a relinquishment deed needs to be signed by both parties and registered.

The stamp duty is similar to that for a gift deed. However there is no discount for relatives, nor are there any tax benefits. Also, both stamp duty and tax will be applicable only on the portion of the property that you relinquish, not on its total value. You can also use this deed to transfer movable property without registration, but it is typically used for immovable property.

So, now, the Modus Operandi is clear and you know the HOW part. To know HOW EXACTLY, do reach out to us.

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