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Stamping/Franking

Stamping / Franking

There are few pertinent questions when it comes to franking of documents. The typical question asked are:

  1. What is Franking?
  2. Can a document be franked once it is executed?
  1. What is Franking?

Ans: You first prepare a document on paper and before signing parties on it, take it to nominated Branch of a Bank pay the stamp duty there and then the bank will put stamp on your document indicating the value of the stamp duty. That is called franking. This is one of the several methods of indicating the payment of stamp duty. Franking machines are installed in some Sub-Registrar office in the State. These machines frank upto a denomination of 999 rupees. An application indicating the amount of duty to be frank is made to the proper officer authorize under the rules along with the unexecuted typed or printed documents. The necessary amount is paid in cash to the proper officer and the required denomination is franked on the document and return to the applicant.

  1. Can a document be franked once it is executed?

Ans: For answering this question we need to look into stamp act. Ideally bank doesn’t frank a document if its executed. Let’s look into Bombay stamp Act provisions in this regard. For analyzing the same we need to first look into the definition of Chargeable under the Stamp Act. The same is mentioned below:

Sec: 1(d) “ chargeable” means, as applied to an instrument, executed or first executed after the commencement of this Act, chargeable under this Act, and as applied to any other instruments, chargeable under the law in force in the State when such instrument was executed or, where several persons executed the instrument at different times, first executed; The chargeability of an instrument starts:-

  1. at the time of its execution in the state;
  2. in case of an instrument executed outside this state, form the date of its receipt in this state; and
  • when several persons execute and instrument, when first of these persons signs the same in this state.

From the above definition it’s clear that chargeability of documents starts only in above three conditions

Another question arises when can be documents stamped or franked if the same is chargeable under the law. For the same we need to look into Bombay Stamp Act. The relevant sections i.e. Sec.17 and 18 is enumerated below:

Sec 17: Instruments executed in State. All instruments chargeable with duty and executed by any person in this state shall be stamped before or at the time of execution 1[or immediately thereafter] 2 [or on the next working day following the day of execution :]

Section18: Instruments executed out of state. (1) Every instrument chargeable with duty executed only out of this State may be stamped within three months after it has been first received in this State. (2) Where any such instrument cannot with reference, to the description of stamp prescribed therefore,

Thus it is clear that as per section 17 and 18 of Bombay Stamp act a document can be stamped only at the time of execution or on next working day following the day of execution. There is only one exception to the same. The exception is in case the same is executed out of state same need to franked within 3 months after it is received in the state

Disclaimer: The Views Expressed in the article is personal opinion of author. The author is CA and CS by profession and one can reach him on @hemanshow79 on twitter or mail queries on hemanshow79@gmail.com. The article can be said as reference material. However courts can take different opinion based on nature and circumstances of each case.

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