If one needs to avail of a home loan to get a property, a buyer might just incur some additional charges. Various hidden expenses involve Franking charges, that a property buyer should compulsorily pay to the bank from the EMI cost. This installment is completed while stamping the house documents. For a more clear approach, the terminologies- Franking and Stamping are very different and should be understood thoroughly to avoid errors.
Difference Between Stamping and Franking
The verified papers are usually required to be stamped to learn their validity.
Whereas a Stamping duty (varying from 4 percent to 10 percent of the property value) is a state tax levied on estate documents such as buying deed, through the variation of assets or premises. Accompanying this, a single time home enrollment fee (around one percent of the house value) is also repaid to the state control.
Franking, on the other hand, is a method to stamp home documents. Whenever an applicant approaches a verified bank or a franking agency or any of its agents, a stamp or a denomination is affixed on the agreement paper thus showing that the payment of the stamp duty has been done. Machines for Franking, normally placed in sub-registrar posts in the state, are utilized to attach the records. The process of franking has superseded the quicker process of publishing the affidavit on non-judicial seal documents. However, the method uncovered doors for scams involving stamp paper like the sensational cases going on. These days, we witness E-stamping is more an option to franking which is error-free and measures forging.
Essential Facts Regarding Franking Costs
- Banks and agencies while franking the documents, usually give charges for giving the services. Some states like Maharashtra and Karnataka levy a fee at 0.1 percent on the selling value or advance amount. For example, a buyer who is buying a house that is worth Rs 75 lakh must pay a franking amount of Rs 7,500. The amount can, though, be subtracted from the stamp duty. That is, if the stamp duty is 5.6 percent, the purchaser has to give only approximately 5.5 percent on the estate value along with certification charges.
- A franking fee is also imposed on a loan deal. Be certain you hold the franking charge prices in your state previously, to get transparency on the finances needed.
- According to the directive of the Reserve Bank of India (RBI) in 2015, agencies will add stamp duty, registration, and other paper-work-related costs while determining a borrower’s loan qualification in cases wherever the cost of the home is up to Rs 10 lakh.
- All supported banks or franking firms may not understand the identical rules for franking and costs included in the method. The rules could differ from state to state or from one bank to added and from one agent to another in the likewise state.
- Banks have a restricted franking quote and assist only for definite hours of a moving day. Further, it is relevant to check if your agency is allowed to render franking duties.