Is a gift deed taxable in India?

A gift of immovable property from a specified relative is exempt from income tax in the hands of the recipient under Section 56(2) of the Income Tax Act. Specified relatives include spouse, siblings, siblings of spouse, parents and their siblings, and lineal ascendants and descendants. However, the stamp duty paid on the gift deed is a cost to the donor or donee depending on the arrangement, and is not a tax on the gift itself. A gift from a non-relative is taxable in the hands of the recipient if the market value exceeds Rs. 50,000.

Is registration of a gift deed compulsory in Kerala?

Yes. Under Section 17 of the Registration Act, 1908, a gift of immovable property must be effected by a registered instrument. An unregistered gift deed for immovable property is void and cannot transfer title. The donor and donee must both appear at the Sub-Registrar office or authorise a representative through a Power of Attorney for registration.

What is a relinquishment deed and when is it used?

A relinquishment deed is used when a co-heir gives up their share in inherited property in favour of other co-heirs. It is commonly used in the settlement of estate matters — where siblings agree that one sibling will take full ownership of a property while the others formally relinquish their share. A relinquishment deed must be registered. Stamp duty is applicable on the value of the share being relinquished.

What is the difference between a family settlement and partition?

A partition divides property that was jointly held — each co-owner receives a separate, individually owned portion. A family settlement is a broader arrangement under which family members agree on how to distribute assets, resolve disputes, and establish rights as among themselves — it can include properties, businesses, and other assets, and can incorporate elements of gift, exchange, and relinquishment. A family settlement deed is enforceable as a contract between the parties and, where immovable property is involved, requires registration.

Property Transfer — Kerala

Gift Deed, Relinquishment & Family Settlement — Kerala

Three of the most frequently required documents in Kerala family property matters — each serving a distinct purpose, each requiring precise drafting, correct stamp duty payment, and registration to be valid.

Transfer of Property Act, 1882 | Registration Act, 1908 | Kerala Stamp Act

Quick Summary

A gift deed is a registered instrument by which the owner of property (the donor) transfers it to another person (the donee) without consideration, governed by Sections 122–129 of the Transfer of Property Act, 1882. For a gift of immovable property to be legally valid, it must be effected by a registered instrument signed by the donor and attested by two witnesses. A relinquishment deed (also called a release deed) is used when a co-owner or legal heir surrenders their share in a property to one or more of the other co-owners — commonly used in inheritance situations where one heir transfers their inherited share to a sibling or parent. Relinquishment deeds must also be compulsorily registered under the Registration Act, 1908.

In Kerala, stamp duty on gift deeds between blood relatives (parent to child, between siblings, spouse to spouse) is concessional — currently 2% of the guideline value. For gifts to non-relatives, the full 8% stamp duty applies. Relinquishment deeds attract stamp duty as per the Kerala Stamp Act, 1959 based on the value of the share being relinquished. Both gift deeds and relinquishment deeds are registered at the Sub-Registrar's office in whose jurisdiction the property is located. After registration, mutation at the Village Office is required to update the revenue records.

Key references: Kerala Registration Department · Transfer of Property Act, 1882 · Kerala Revenue Department · E-Rekha · Last reviewed: June 2026

Three Documents — When Each Is Used

Gift Deed

Voluntary transfer of property without consideration (no payment)
From donor to donee during donor's lifetime
Must be accepted by the donee
Registration mandatory for immovable property
Used: parent to child, between family members, charitable donation
Stamp duty: levied on market value

Relinquishment Deed

A co-heir gives up their share in inherited property
Used to consolidate inherited property in one heir's name
Registration mandatory
Stamp duty: on value of share being relinquished
Used: sibling gives up their share of ancestral home
Cannot be used to relinquish property in favour of a non-heir

Family Settlement Deed

Comprehensive arrangement distributing assets among family members
Not strictly a partition — a contractual settlement
Can include multiple properties, businesses, and assets
Registration required if immovable property is involved
Reduces future dispute risk — binds all parties contractually
Stamp duty: depends on nature of transaction within the deed

Gift Deed in Kerala — Key Requirements

A gift of immovable property under the Transfer of Property Act, 1882 (Section 122) requires:

Transfer by registered instrument: Section 17 of the Registration Act, 1908 makes registration compulsory for gifts of immovable property — an unregistered gift deed is void and transfers no title
Acceptance by donee: The gift must be accepted by the donee during the donor's lifetime. Acceptance can be express or implied from conduct. Without acceptance, the gift is incomplete and ineffective
Delivery: For movable property, actual or constructive delivery is required in addition to acceptance
Sound mind and free consent: The donor must be of sound mind and the gift must not be obtained by coercion, undue influence, or fraud — gifts obtained by undue influence over elderly or infirm donors are regularly challenged

Stamp Duty on Gift Deeds in Kerala

Stamp duty in Kerala on a gift deed is calculated on the market value of the property. The rate differs between gifts to close relatives (blood relatives, spouse) and gifts to non-relatives. Close relative gifts attract a concessional rate under the Kerala Stamp Act — verify the current applicable rate with the Sub-Registrar office at the time of registration, as rates are periodically revised.

Income Tax on Gift of Property

Tax exempt: A gift of immovable property from a specified relative is exempt from income tax in the hands of the recipient under Section 56(2) of the Income Tax Act, 1961. Specified relatives include: spouse; siblings; siblings of spouse; parents, their siblings; and lineal ascendants/descendants and their spouses. A gift from a non-relative is taxable if the stamp duty value exceeds Rs. 50,000.

Relinquishment Deed — Common Scenarios in Kerala

After the death of a parent, ancestral property passes to all legal heirs — children, surviving spouse — as co-owners in undivided shares. In many Kerala families, the practical arrangement is that one child remains in the family home while others pursue careers elsewhere. A relinquishment deed formalises this — the siblings who do not occupy or claim the property formally relinquish their share to the sibling who does.

Important limitation: A relinquishment can only be in favour of a co-heir — someone who has an equal right to the property by inheritance. It cannot be in favour of a third party. To transfer an inherited share to a person outside the co-heir group, a sale deed or gift deed must be used instead.

Family Settlement — The Most Comprehensive Tool

Where a family has multiple properties, business interests, and assets to distribute, a family settlement deed is the most effective approach. It is not a partition deed in the strict sense — it is a contract under which the family members agree on the allocation of all assets among them. Courts have consistently held that a bona fide family settlement, entered into to avoid future dispute, is enforceable even if it involves transfers that would otherwise require stamp duty and registration, as long as the settlement is genuine.

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Frequently Asked Questions

Is a gift deed taxable?

A gift of immovable property to a specified relative (spouse, siblings, lineal ascendants/descendants) is exempt from income tax in the hands of the recipient under Section 56(2) of the IT Act. A gift from a non-relative is taxable if the stamp duty value exceeds Rs. 50,000. The stamp duty itself is a cost — not an income tax — and is paid at the time of registration.

Is registration of a gift deed compulsory?

Yes — for immovable property, registration is mandatory under Section 17 of the Registration Act, 1908. An unregistered gift deed for immovable property is void and transfers no title. Both donor and donee (or their duly authorised PoA holders) must appear before the Sub-Registrar for registration.

What is a relinquishment deed?

A document by which a co-heir formally gives up their share in inherited property in favour of another co-heir. Used when siblings agree that one sibling will hold full title to a family property. Must be registered. Stamp duty is calculated on the value of the share being relinquished. Can only be used in favour of a co-heir — not a third party.

What is the difference between family settlement and partition?

A partition divides jointly-held property into separate individually-owned portions. A family settlement is a broader contractual arrangement distributing assets, resolving disputes, and establishing rights as among family members — it can include properties, businesses, and other assets. A bona fide family settlement to avoid future disputes is enforceable even where strict partition formalities are not followed, provided it is genuine and all parties freely consent.

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Property Transfer Within the Family?

The office drafts and registers gift deeds, relinquishment deeds, and family settlement deeds throughout Kerala. All matters coordinated remotely for NRI family members through a Power of Attorney. Response within one working day.

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