There has always been some confusion surrounding the registration of a gift deed in Pakistan, particularly when it involves gifting immovable assets.
Simply put, it is entirely legal to gift a property to a family member or anyone else. However, the individual making the gift, known as the donor, must have full authority over the property they are giving to the recipient, referred to as the donee.
Under Islamic Law, this is called 'Hiba' and does not involve any monetary exchange between the donor and the donee. A gift is not legitimate if it is made under coercion, deceit, or threats.
The Transfer of Property Act, 1882, defines a ‘gift’ as the voluntary transfer of existing movable or immovable property from one person to another. It also states that the donee must accept the gift during the lifetime of the donor. If the recipient does not accept the gift before the donor’s death, the gift is void.
The law further stipulates that "every Pakistani citizen of sound mind" has the right to give away their legally-owned property as a gift to another.
For a Hiba to be valid, three conditions must be met:
A Gift Deed is a legal document that records the transfer of property ownership from a donor to a donee, specifying that the transfer was made voluntarily without any monetary exchange. Unlike a sales deed, no financial transaction is involved in gifting a property.
Although a donor does not have to declare a gift in writing (it can be done orally), gift deeds for property transfer are executed to create a valid record.
As per the law, one can execute a gift deed to transfer any tangible movable and immovable property, including cash, bonds, jewelry, vehicles, and real estate.
However, registering a gift deed is essential for it to be valid, especially for transferring ownership rights of immovable property.
Any citizen of sound mind can gift some or all of their property during their lifetime. This applies to both men and women, as women in Pakistan have the right to dispose of or acquire property through a gift deed.
The donor must be at least 18 years old to register a gift deed. A legal guardian can also make a gift on behalf of a child or someone with a mental disability, but only in cases of absolute necessity.
Both Muslims and non-Muslims in Pakistan are allowed to make gifts.
One can gift their property to anyone, regardless of blood relationship or legal ties. A gift deed can be executed for both an individual and a legal entity, such as a company or a trust.
Once the gifted property is accepted by the donee, the donor must relinquish all ownership rights. For the transfer of possession, the donor must give away their rights; otherwise, the property gift deed registration will not be valid.
In some cases, the donor might have limited rights to revoke the gift.
There is no standard gift deed format in Pakistan. Generally, the deed mentions that the gift was made voluntarily and without coercion, and that the donor is not bankrupt and will not ask for the gift to be returned.
A gift deed must have the signatures of both the donor and the donee to be registered.
For cash and prize bonds, the deed usually mentions the total amount transferred and the mode of transfer. For jewelry, the type, weight, and current valuation may be mentioned.
For real estate, documents proving ownership rights must be submitted. These may include:
To register a gift deed, the details must be written on a stamp paper with the names of the donor and the donee. Even though no monetary exchange is involved, the deed must be attested by at least two witnesses before being registered with the concerned sub-registrar.
For immovable properties, the title cannot be legally transferred to the donee unless both parties have registered the gift deed and paid the property tax.
Property transferred as a gift is subject to Capital Value Tax, determined by the gift's overall value. However, property gifted by parents, grandparents, siblings, spouses, or children is exempt from taxation.
For more information on CVT and Stamp Duty, refer to our comprehensive guide on property taxes in Pakistan.
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