Stamping and Franking Charges on Home Loans in India. Know the Difference - Home Loan Stories | Kotak Mahindra Bank

07 JUNE, 2021

While buying a home, it is crucial to know about all the aspects associated with the purchase. There are numerous charges involved while buying a property that can increase the overall cost of your home. Stamping and franking are two such charges, which need to be better understood, as they are often used interchangeably. Keep in mind that these are not covered as part of your home loan.  As a first-time homebuyer, it is crucial to understand the difference between the two. Before distinguishing between the two, learn about each term separately.

What Is Stamping?

Stamping is the tax that State governments charge for the transfer of properties or assets. Stamp duty is levied to legalise documents that transfer the property title from the seller to you. Contracts such as home loan papers, mortagage deeds, etc. need to be stamped to be legally valid. But it can differ from one State government to another.

The stamp duty on your home loan and the property registration documents makes your loan agreement legally admissible. Common ways of stamping in India include a paper-based method, franking and e-stamping. Though not all modes of stamping may be available in every State, you can opt for any one of them, as per availability.

What Is Franking?

Franking is the process wherein legal documents are stamped. This procedure indicates stamp duty payment confirmation. In order to frank a document, you’ll need to take it to an authorised franking centre. An application form will be provided to you. All you need to do is, fill the form, pay stamp duty, and get a stamp affixed on the document to confirm stamp duty payment. To affix the stamp, a franking machine is used. Post franking, you can sign your document.  

Difference Between Stamping and Franking Charges

Understand both stamping and franking charges with this comparative view:

Factors

Stamping Charges

Franking Charges

Type of Charge

Stamp duty is a tax that State governments charge for legalising the documents involved in purchasing a property

Franking charges are nothing but a fee levied for facilitating your payment of stamp duty. The documents are stamped to verify stamp duty registration.

Importance

Stamp duty registration is mandatory and must be done to avoid a penalty

Franking isn't mandatory as you can opt for e-stamping or purchase stamp papers

Authority for Payment

You must pay the stamp duty charges to the Sub-registrar of Assurances

You must pay the franking charges to the banks or agencies authorised for stamping documents

Charges

Stamp duty is a percentage of the total cost of your property set by the State government

Franking charges can be a flat fee or a percentage of the stamp duty being paid. It is much lower than stamp duty. But this fee also varies from one State government to another.

 

Mention about checking eligibility

Now that you are aware of stamping and franking charges on home loans in India, you can consider these separate costs and consider saving in advance. Remember, as we said before, these charges aren’t included in your home loan amount. Keeping these in mind, you can plan your finances and check your eligibility using a home loan eligibility calculator. If you meet the eligibility criteria, you can apply for a home loan, today.

Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.

 

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.