Gift Deed vs Sale Deed: When & How to Use Legally

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Both are legal ways to transfer property—but the intent, process, and tax impact are very different.
What Is a Gift Deed?

  • A voluntary transfer of property without any payment

  • Commonly used between family members (parents, children, siblings, spouse)

  • Must be registered to be legally valid

  • Once registered, it’s irrevocable

  • Stamp duty is lower in most states for gifts to relatives

  • No capital gains tax for the donor, but the donee pays tax if they sell later
    What Is a Sale Deed?

  • A commercial transaction where property is sold for money

  • Legally transfers ownership to the buyer

  • Must be registered and attracts higher stamp duty

  • Seller may have to pay capital gains tax on profit

  • Buyer must deduct 1% TDS if property value exceeds ₹50 lakh
    When to Use Which:

  • Use a Gift Deed when transferring property to close relatives without payment

  • Use a Sale Deed when selling property to anyone—family or otherwise—for money

  • Always consult a property lawyer to avoid future disputes

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