Expert Clarifies Stamp Duty on Gifted Property

 

When gifting a property share, stamp duty is based on the current market value and presumed equal ownership, not the original purchase contribution.

In a recent financial query, a citizen asked how to calculate stamp duty on a property share being gifted by their brother. Legal experts clarified a common misconception, explaining that the calculation is based on the property's current market value and legally assumed equal shares, not the actual amount each person contributed at the time of the original purchase.

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The issue arose from a jointly purchased property where one brother contributed 30% and the other 70%, but this ratio was not specified in the registered sale deed. When gifting his share, the question was whether the stamp duty would be based on the original 30% contribution or a presumed 50% share. Experts clarified that according to the Indian Stamp Act, 1899, co-owners are considered equal (50:50) partners unless the deed explicitly states otherwise.

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This legal interpretation means the stamp duty is calculated on a larger base than many might expect. In the example provided, with a current property value of ₹100, the duty is levied on ₹50 (the market value of a 50% share), not the ₹30 originally contributed. Experts noted that supplementary documents like money receipts are generally not considered conclusive evidence of ownership proportion in property law.

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This scenario highlights a common pitfall in joint property ownership, especially within families where financial contributions may be unequal but are not formally documented. The registered sale deed is the primary legal document that establishes ownership shares. Without explicit ratios mentioned in this deed, the law presumes an equal split, which dictates how transactions like gifts, sales, or inheritances are legally and financially processed.

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The expert opinion is firm: stamp duty is calculated on the market value of the presumed 50% share. However, there may be a silver lining. Experts advise that some states offer significant stamp duty concessions for gifts between close relatives, including siblings. The final recommendation is to consult with the local Sub-Registrar's office or a property lawyer to verify the specific rates and available exemptions in your state before proceeding with the gift deed.

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