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Franking and Stamping: What’s The Difference?

Two commonly misunderstood terminology, Stamping and Franking, must be clearly outlined when dealing with documents and payment instruments.

Stamp duty is required if you want to make a document legally binding. Most individuals are familiar with these fees when it comes to home loans. However, Franking is also a term for this. The purpose of this step is to give legal status to a document. Does this imply they are identical? Unfortunately not.

So What Exactly Is Franking?

The act of stamping legal documents is referred to as Franking. Authorised banks can print your documents in one of two ways: stamping them or attaching a denomination. In most cases, franking machines used to perform this task. An electronic stamp is a confirmation that you have paid your stamp tax.

You must sign the documents after the bank has stamped them as proof of stamp duty payment. It is possible to acquire pre-franked stamp papers as an alternative to Franking.

Nature of the fees

The franking price is the fee you pay to stamp your property paperwork officially. Stamp duty has been paid, and this document proves that fact.

Fees amount

If the property is worth 0.1 % or less, franking fees are 0.1 – 0.2 %. It differs from state to state, and it can also be done for free in many cases. As an alternative, you may include the franking price in the stamp tax.

Who authorises the charge?

Official Franking can only be performed by banks or agents authorised by the government. Franking is only available in a bank for a limited number of hours per day, so plan your trip accordingly.

What Do You Mean By Stamping?

Payment of tax to the government to have your property paperwork approved during a home purchase is known as stamping. A sale deed, mortgage papers, or a transfer of assets or properties are typical examples of these documents.

Moreover, to make your property acquisition legitimate, you must pay stamp duty and registration fees as part of the stamping process. Immediately after that, you will receive a stamp on your selling agreement, and it is permissible to use stamps on property papers.

Nature of the fees

You must pay stamp duty to have your property paperwork authenticated, and it’s a reassurance that all of your property paperwork is in order.

Fees amount

Stamp duty and registration fees are based on the entire cost of the property you intend to buy or sell. Stamp duty typically ranges from 3% to 10% of the property’s value. There are several variables to consider, such as where the transaction takes place, the property’s status, the buyer’s age and gender, etc.

A typical stamp duty rate in Mumbai is 5% of the entire purchase price of the home. There is also a 6 % stamp tax on properties purchased by men in Delhi, and stamp duty is roughly 4% for a lady purchasing a home in Delhi.

A small percentage of the property’s total value is required as a registration fee. In addition, Rs. 100 is charged as a paste-up fee.

Who authorises the charge?

Depending on your location, you will need to visit the sub-office registrar to pay the stamp duty. You can also make the payment through the site of your state.

What Is The Difference Between Franking And Stamping?

Stamp duty is a governmental tax imposed on legal documents in transferring assets or property. In India, several contracts, real estate transactions, mortgage deeds, and other legal documents must be stamped in order to be valid. When it comes to property papers, Franking is the procedure of stamping them.

If you’re dealing with real estate paperwork, the stamp duty you pay can be a set amount or a percentage of the transaction price.

If you fail to pay stamp duty on a legal document, you may be subject to a fine. For legal documents, however, the term “franking” refers to the procedure of stamping the paper with an official seal. Stamp duty is paid by affixing any mark or stamp on a piece of paper, and this technique is utilised.

Hence, stamp duty is a fee you must pay, whereas Franking is the method used to stamp your papers with the stamp. Are you still overwhelmed? Let’s get this straight.

Postal envelopes with different stamp amounts are commonplace. You can come across prints that look like stamps but have the denomination printed on them instead of actual stamps. The post office typically employs this method for large-volume mailings (such as magazines), for which stamping takes too much time. Postal Franking is the term for this.

There are several parallels between the two processes. An authorised bank or franking agent stamps your document as part of the franking procedure, and stamp duties have been paid for this document utilising this stamp.

Pros and Cons of Franking Over Stamping

Using cash or demand drafts to cover the fees and stamp duty makes franking an attractive option because it may be completed fast.

However, using Franking to stamp your documents has a multitude of challenges. Franking agents and banks require that you pay the franking fees in cash for small amounts and by money order for more considerable sums.

In the case of Franking, not all licensed agencies or banks follow the same rules, and the rules may differ between states and even within a single state.

Franking is only available during the week for a limited time. The franking machine is not available at every branch of an authorised financial institution. All banks with authorisation have a quota known as the “franking quote,” which is critical.

Final Thoughts

Franking and stamping are two options that property buyers have when financing their purchases. The stamp duty on a home loan, franking charges, and house registration charges may vary by state and lender, so be sure to verify before applying for a home loan.

You’ll be able to set aside the necessary funds beforehand. To prevent delays, schedule all of the necessary steps for Franking ahead of time.

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