There has always been a certain amount of confusion revolving around the subject of how to register a gift deed in Pakistan, especially when it comes to gifting immovable assets.
To put it simply, it is perfectly legal to gift a property to a family member, or anyone else for that matter. However, it is mandatory for the individual who makes the gift, referred to as a donor, to have the complete authority over the property they are voluntarily bequeathing upon the recipient, referred to as donee.
It is called ‘Hiba’ under Islamic Law and does not involve any monetary exchange between the donor and the donee. It is also important to mention that a gift cannot be legitimate if it is made under any coercion, deceit or threats.
The Transfer of Property Act, 1882, defines ‘gift’ as the voluntary transfer of existing movable or immovable property by one person to another. It also says the donee must accept said gift during the lifetime of the donor. If a recipient of the gift fails to make acceptance before the donor’s death, the gift is void.
The law further states that “every Pakistani citizen of sound mind” has the right to give away their legally-owned property in the form of gift to another.
In order for Hiba to be valid, three conditions must be met.
- Declaration of the gifted property (whether movable or immovable) by the donor
- Acceptance of the gifted property by the donee
- The delivery of possession by the donor to the donee
What is a Gift Deed?
A Gift Deed is a legal document that records the transfer of ownership of the property from a donor to a donee. It also specifies that the transfer was made voluntarily without any exchange of money between the two parties. Unlike executing a sales deed, there is no financial transaction involved in the process of gifting a property.
Although it is also not mandatory for a donor to declare a gift in writing, as it can be done orally as well, gift deeds for property transfer are solely executed for the purpose of creating a valid record.
As per the law, one can execute a gift deed for the transfer of any tangible movable and immovable property. This includes cash, bonds, jewellery, vehicles and real estate among others.
However, it is important to register a gift deed for it to be valid – especially when it comes to transferring the ownership rights of immovable property.
Who Can Make a Gift?
As explained above, any citizen of sound mind can give away some or all of their property during their lifetime.
Contrary to popular belief, the rule applies to both men and women. As per the property rights of women in Pakistan, a woman can both dispose of as well as acquire property by a gift deed.
Moreover, the donor must be 18 years of age to register a gift deed. A legal guardian can also make a gift on behalf of a child or someone suffering from a mental disability. However, this must only be done in cases of absolute necessity.
Owing to its diverse population, the law in Pakistan allows both Muslims and non-Muslims to make a gift.
Who Can Receive a Gift?
One can gift their property to whomever they deem fit regardless of their 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.
Rights of the Donor
Whether they are executing a gift deed for cash or a gift deed for real estate, the donor has to relinquish all ownership rights once the gifted property is accepted by the donee. For the transfer of possession, it is mandatory for a donor to give away their rights, Otherwise, the property gift deed registration will not be valid.
In some cases, a donor might have limited rights to revoke the gift as well.
Drafting a Gift Deed
There is no set gift deed format in Pakistan.
Generally, when someone bequeaths their property to a loved one, the deed mentions that the gift was made voluntarily and without any coercion. It also clarifies the donor is not bankrupt and won’t ever ask for the gift to be returned.
Not to mention, you cannot register a gift deed in Pakistan if it does not have the signatures of both the donor and the donee.
In case of a gift deed for cash and prize bonds, the document usually mentions the total amount that was transferred as well as the mode of transfer (via cash or check etc.). If one is giving away their jewellery, they may mention the type, weight and current valuation for an estimate.
On the other hand, one may have to submit a few documents to prove their ownership rights while executing a gift deed for real estate.
Whether you are gifting a parcel of land or a house to your relative, friend or acquaintance, here are some of the documents required for gift deeds.
- Attested copies of donor’s CNIC
- Attested copies of donee’s CNIC
- Original allotment letter
- Property tax clearance certificate
- No-objection certificate from the local building control authority
- Bank draft of PKR 3,000 or 5,000 (the amount varies with each case)
- Statement recorded before the concerned Deputy Director
- The official seal of the concerned Deputy Director
For further information on the topic, you can refer to our detailed guide on the process of property transfer through gift deed in Pakistan.
How to Register a Gift Deed in Pakistan
For gift deed registration in Pakistan, the aforementioned details must be put down on a stamp paper along with the names of the donor and the donee. Even though there is no monetary exchange involved, the deed must be attested by at least two witnesses before being registered in the concerned sub-registrar.
For immovable properties, the title cannot be legally transferred to the gift recipient’s name unless both parties have registered the gift deed and paid the property tax.
Tax on Gifted Property in Pakistan
This is one of the most important aspects of gift deed registration in Pakistan.
Property transferred as a gift is liable to taxation as it falls under Capital Value Tax. The amount to be paid is determined according to the overall value of the gift. However, a property gifted by parents, grandparents, siblings, spouse or children is exempt from taxation.
You can find out more about CVT and Stamp Duty in our comprehensive guide on different types of property taxes in Pakistan for further clarification on the topic.
Meanwhile, if you are planning to invest in the property market, you should also take a look at different types of fees applicable to real estate investments in Pakistan.
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