What is Meant by Franking Charges on a Home Loan?
What is Franking?
Franking is a course of getting your contract validated, along these lines affirming that you have made the Stamp Duty installment. Franking demonstrates that your records are lawful. At the point when you approach a bank or a franking office, they fasten your contract administrative work with a stamp or division, utilizing a franking machine, accordingly, demonstrating that your Stamp Duty is paid. The charges are different for each state as per norms of the government. The process of Franking is not only utilized for the home loan process, but also the other legal documents. There is a thin line differing the stamp duty from franking. Read this article to know more.
Charges Detail on Franking
Franking must be done on your property deal reports as well as the rent arrangement. As we have discussed earlier, franking charges, being an administration demand, contrast from one state to another. Franking charges in Karnataka, for instance, are at least 0.1% of the deal esteem or the credit. So, on the off chance that the property you are purchasing is worth Rs. 45 lakhs, your franking charges would be Rs. 4,500. This sum will be deducted from stamp obligation, which additionally fluctuates among states, and enrollment expenses. Right now, in Bengaluru, the stamp obligation is 5.6%, so on the off chance that the franking charge is deducted, you should pay 5.6% of the property estimation notwithstanding enrollment expenses.
Another 0.1% franking charge should be paid on the credit understanding. This implies that a sum of 0.2% - in any event - will be spent on verifying your archives. It is advised to check the franking charge in your state before you start advanced methodology, so the sum doesn't surprise you. There should be a checklist used by the individual to make sure that everything is inline and there are no obligations or penalties overdue.
What is Stamp Duty?
This is essentially a fee that homebuyers are responsible to pay for legitimizing their legal documents (like deals deeds or move of property or resources), during the home purchasing process. As indicated by charge regulations, it is compulsory for each home purchaser to pay stamp duty, to show that his/her property is lawfully legitimate. Like franking, the stamp duty also differs from state to state. For instance, Mumbai has a stamp duty charge of 5% which is put on the price tag of the particular property. Now that the reader can easily distinguish between the process of franking and paying stamp duty, we can move towards the hefty differences among these two subject areas. The comparison table below clearly depicts all the points that an individual must keep in mind.
| Area |
Franking |
Stamp duty |
| Amount |
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. |
Stamp obligation is by and large determined on the all-out cost of your property. Its rate differs based on the charges indicated by a state. Commonly, it differs from 3% - 10% of the absolute property estimation. |
| Reason |
When an individual has paid the stamping duty, the franking comes into the picture. This confirms that the papers are officially stamped and initiated with the government protocols. |
The stamp duty is given by the homeowner or the fund raiser just to show that the government has issued an approval of the process. |
| Optional? |
Franking is optional as some people prefer e-stamping. |
Stamping duty must be paid and if not done on time, the individual responsible has to pay a surplus penalty. |
| Responsible |
The process of franking can be initiated through the bank or the official franking office. |
Stamp duty is to be paid to the government authority. To be precise this is called the sub of assurance. There are third parties that can help with the process, but the end payment goes to the sub-register itself. |
Common Questions Asked
Distinguishing franking from stamp duty is sometimes confusing, which is why we have listed down a set of common questions that an individual may ask while the process is ongoing.
1. When is It necessary to get the documents franked? Process of franking is possible once all the documents, whether it being the property papers, or the rent agreement are fully stamped.
2. Is there GST on franking?Goods and Services Tax (GST) is usually not applicable on franking.
3. What are the Franking charges specifically on Home Loan?The franking bracket is between 0.1%-0.2%. There is a capping of INR 20,000 as well which in the franking charges.
Disclaimer: *Please note that this article is for your knowledge only. Loans are disbursed at the sole discretion of SMFG Grihashakti. Final approval, loan terms, disbursal process, foreclosure charges and foreclosure process will be subject to SMFG Grihashakti’s policy at the time of loan application. If you wish to know more about our products and services, please contact us.