Owning a home is a big feat and brings with it a sense of freedom and security. But the process involves more than just checking the home loan eligibility, looking up the interest rates, securing a home loan, making down payments, and monthly EMIs. Amidst other things, there are a variety of legal procedures involved, such as stamping and franking. Often the two terms are misunderstood, especially by first-time buyers. The difference between the two will help you gain an insight into what exactly you’re paying for.
What is Stamping?
Stamping is the state government tax that applies to property purchase transactions such as the home loan paper, property deed, etc., to legalize documents. It’s a mandatory fee to ensure your property is legally valid. The amount differs from state to state.
What is Franking?
Franking is the process that ensures you’ve paid stamp duty. Your stamp duty paper is attested with a distinctive stamp that confirms the payment of stamp duty. This step not only streamlines the process but also eliminates fraud. The franking charges may differ from state to state.
What’s the difference?
| Criteria | Stamping | Franking |
| Nature | A government levied a tax to legalize the documents you need to purchase your property. | Once you’ve completed stamping, franking is the next step. Essentially, it confirms you’ve paid the stamp duty and can move ahead with the following procedures. |
| Type | It’s a form of tax. | It’s a process of stamping. |
| Necessity | It’s needed to show that the property is transferred to you legally. And stamp duty is recorded proof of ownership and payment of tax liability. | Physically getting the papers stamped indicates the documents are legal and you’ve paid the necessary taxes. It eliminates any fraud in the process. |
| Fee | The amount varies from state to state, but typically it’s calculated on the total property value. Usually, it’s anywhere from three to ten percent of the total property value. | Like stamping, franking charges vary from state to state. While prices are capped at a particular amount, the typical charges are 0.1% to 0.2% of the total property value. |
| Who do you pay | When you pay stamping charges, they are paid to the Sub-registrar of Assurances when registering the property. | When you pay franking charges, you pay government-authorized banks or agencies. |
Conclusion
Purchasing a home is a huge investment. It’s important you remain smart and informed during the buying journey. And when you’re buying a house, simply checking home loan interest rates and swiftly computing how much you need monthly with a home loan EMI calculator is not enough. Go beyond that and research all the costs involved. For affordable home loan rates, attractive financing options, and the perfect home loan match, compare various lenders and pick the best.
