Franking Charges – How To Calculate | Procedure To Follow
When you buy a property, you have to pay a number of miscellaneous charges in including franking chargers. So, here in this article, we will be discussing in detail, about the franking charges, how to calculate them and what procedure you need to follow while paying them. Also, we will be discussing in detail the difference between franking charges and stamp duty, where people always get confused about.
What are Franking Charges and To Whom We Have to Pay them?
Franking charges are a kind of fee that we need to pay to the bank or agency for stamping the property papers. These stamped papers serve as legal proof of payment of stamp duty to the government. Generally, these charges are 0.1 % of the total purchase.
What is the Meaning of Franking?
Franking is the process wherein your property papers will get stamped using a franking machine. This franking of documents is facilitated by authorized banks and agents only, who are authorized to stamp your legal property papers. Your legal papers are considered viable only after this procedure, as franking acts as proof, that you have paid a certain amount of stamp duty and registration charges to the government.
How To Calculate Franking Charges?
The charges for franking varies from state to state however these charges are 0.1 % of the price of property purchases value. For example, if you buy a property worth 60 lacs, then the 0.1 % of this value i.e. Rs. 6,000 you will need to pay as franking charges. Also, make a note that these charges are included in the stamp duty. For example, if your stamp duty is 5 %, then you will need to pay just 4.9 % at the time of registration to the sub-registrar’s office and the 0.1% will be the charges for franking that you will need to pay to the franking authority.
Do We Need To Pay Franking Charges on Loan Agreements?
If you are opting in for a home loan for property purchase then you will need to pay additional franking charges on the home loan agreement. Additional 0.1 % franking charges you will need to pay in addition to the property document charges for franking. This means if you are opting in for the home loan then you will need 0.2 % charges in total to authenticate your legal documents.
Also, Read: Step By Step Guide To Buy A New House
Do We Need to Pay GST on Franking?
As per the Goods and Services Tax Act, 2017, there is no GST payable on judicial stamp papers, and charges for franking are exempted from GST.
What is the Procedure To Follow For Franking?
Franking is the procedure followed after the documents are ready with all the required content in them with proper clauses, on the plain sheet of paper. Franking must be done before signing the papers and before franking, the applicant needs to file the application, with proper details of franking to the authority. After the proper procedure is followed and the franking is done, the documents generated can be presented to the sub-registrar’s office for stamp duty and registration procedure.
Is there is a Difference Between Franking Charges and Stamp Duty Charges?
Yes, charges for Franking are 0.1 % of property purchase whereas stamp duty varies from 5 % to 7.5 % from state to state in India. The following chart will give you better clarity about the difference in between.
| Stamp Duty | Franking Charges |
|---|---|
| Stamp Duty is the government tax that you need to pay while buying properties. This government tax is levied on property documents, such as sale deed or transfer of properties. | Franking charges are the minimum charges that you need to pay to the franking authorities like a bank or an agency that has the authority to stamp the legal papares. |
| Stamp duty varies from 4% to 7.5%, from state to state in India. | Franking usually is 0.1 % of the total property purchase value and it gets deducted from the stamp duty charges afterward. |
| Stamp Duty is always paid at the sub-registrar's office or on the state's online portal. | Franking charges are paid only to the authorized banks or agencies who have the authority to stamp the legal papers, in specific hours of time. |
Is There Any Alternative Procedure for Franking?
Franking is the most commonly followed procedure for paying stamp duty to the government. However, there are other ways with which you can pay these charges to the authority. These include buying pre-embossed stamp papers or going with the e-stamping procedure
Pre-embossed Stamp Papers
Getting Pre-embossed stamp paper from authorized banks and vendors may be difficult for all the denominations. And it is also tedious for common people to check its authenticity, so, it is better to follow franking than opting in for the pre-embossed stamped paper.
e-stamping or Online Franking?
e-stamping or online franking is another way to pay for stamp duty to the government and it is a popular procedure to follow, unlike pre-embosses stamp papers. This procedure is more secure and tamper-proof. The e-stamping can be easily done online using internet marketing. Even if the online franking procedure is easy to follow it has its own disadvantages. Like an e-stamp paper cancellation is difficult and also people from quota restrictions will find it difficult to find their kind of preferences in online franking.
So, it is advisable to go for a normal franking procedure than any of the above.
Frequently Asked Question on Franking
| Is the Franking of Documents a Mandatory Procedure in India? |
|---|
| It is mandatory to pay the stamp duty charges for the legal documents for property and franking is one of the procedures to pay stamp duty for a legal document to the authority. |
| Is franking is the only procedure to pay stamp duty on legal paper? |
|---|
| No, franking is not the only procedure to pay stamp duty on legal documents. There are other ways to pay, like pre-embossed stamp paper and e-stamping. |
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