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Tata Capital > Blog > Loan for Home > Stamping and Franking Charges on Home Loans: What’s The Difference?

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Stamping and Franking Charges on Home Loans: What’s The Difference?

Stamping and Franking Charges on Home Loans: What’s The Difference?

Purchasing a house can seem a straightforward process on the surface – you borrow a loan at affordable home loan interest rates and repay it in instalments for a given term. However, the cost of buying a house isn’t limited to the funds you borrow or the sum you pay to the builder. It involves some small legal charges as well.

Two of these are franking and stamping charges, which many home buyers misunderstand, especially those purchasing a property for the first time. Knowing the difference between the two is essential if you want to know what you’re paying for.

So, if you’re unfamiliar with these seemingly interchangeable terms, this article will help you understand the difference between the two.

What is stamping?

Stamping is a form of tax levied for legalising documents - property deed, home loan papers, etc. According to government rules, paying stamp duty registration fees is mandatory to make your property purchase legally valid.

Additional Read: What is a Stamp Duty? How to Calculate Stamp Duty Online?

What is franking?

Franking comes after stamp duty registration. It involves stamping the stamp duty paper to confirm the payment of stamping fees. The government introduced this measure due to rising fraud cases of using counterfeit stamp papers.

Franking vs stamping charges

NatureStamp duty is the tax that the government levies in order to legalise all the documents necessary to complete your property purchase.Franking charges come after you’ve already paid the stamp duty. These include the cost of stamping the documents to confirm stamp duty registration.
NecessityCarrying out stamp duty registration is mandatory, and not paying the fees will result in a penalty.Franking your documents is optional. Many people prefer e-stamping nowadays or buy papers that are already stamped.
AmountStamp duty is generally calculated on the total cost of your property. Its percentage varies depending upon the charges specified by a state. Typically, it varies from 3% - 10% of the total property value.Franking is charged at 0.1% - 0.2% of the total property value. Generally, franking prices are capped at a particular amount. Like stamp duty charges, the prices vary depending on the state.
Authority to which the charge is paidStamp duty charges are paid to the Sub-registrar of Assurances.Franking fees are paid to the agencies or banks that have been authorised by the government to carry the stamping of legal documents.

Additional Read: Hidden Home Loan Charges that you can easily Miss Out

In your home-buying journey as an informed buyer, it is important to understand these two charges, the differences between them and how to calculate them. You can calculate stamp duty using our stamp duty calculator.

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