What is Franking Charges?

At the time of buying a property, there are various documents involved and the buyer has to pay for certain registration fees, and other charges to complete the whole transaction. One of the applicable charges include franking charges but what are franking charges? Read through this answer to know the meaning of franking charges and everything about them.

Franking charges are the charges levied on the buyer to complete the stamping process on a document using a franking machine. The process of franking is done at the authorized banks or by authorized agents only. They charge a certain percentage of the transaction value, usually between 0.1% to 0.2%.

There are times when people confuse stamp duty with franking charges, however, there is a technical difference between the two. 

Stamp duty is the tax that shows that the documents are legal and valid in court of law. Franking charges, as mentioned, are the charges paid to put a stamp on the documents that state all the duties and charges have been paid by the buyer.

Franking is done once all the documents are verified and the stamp duty among other charges have been paid. The authorities use franking machines to put a stamp on the documents.

GST is not applicable on franking charges. 

Franking charges are applicable on home loan documents as well. The charges are calculated on 0.1% to 0.2% of the total loan amount. There is a capping of Rs. 20,000 on franking charges.

I hope now you understand franking charges meaning and everything around these charges.