Firm registration

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ankamma rao (Querist)
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23 May 2017 Dear Experts,

I want to know whether 1000 franking is required on rental agreement when rent amount is 20,000 PM.This is for firm registration .

Thanks in advance

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ankamma rao

ankamma rao (Querist)
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24 May 2017 RLYYY PLZZZ EXPERTSSSSSSSSSSSSS

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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24 July 2024 In India, for registering a firm, a rental agreement is often required as proof of address for the business premises. Here are some points to consider regarding franking of the rental agreement:

1. **Franking Requirement**: Franking is the process of stamping a document to indicate that stamp duty (a form of tax) has been paid on it. The requirement for franking depends on the state in which the rental agreement is executed, as stamp duty rates and thresholds vary across states in India.

2. **Threshold for Franking**: Typically, rental agreements with a monthly rent amount exceeding a certain threshold are required to be stamped or franked. This threshold varies from state to state. For example:
- In Maharashtra, the threshold for franking a rental agreement is usually when the annual rent exceeds Rs. 1,00,000.
- In Karnataka, the threshold is Rs. 21,000 per month (as of previous guidelines, it may have changed, so please check current rates).

3. **Implications for your Case**:
- If the rent amount is Rs. 20,000 per month, and assuming the rental agreement is for a year, the annual rent would be Rs. 2,40,000.
- In many states, this amount exceeds the threshold for franking the rental agreement. Therefore, in such cases, the rental agreement would typically need to be franked.

4. **Process for Franking**:
- To frank a document, you need to visit an authorized franking center or a bank that offers franking services.
- You'll need to pay the applicable stamp duty based on the rent amount and duration specified in the rental agreement.
- The franking center or bank will stamp the rental agreement after payment of the stamp duty, which serves as proof that the duty has been paid.

5. **Importance for Firm Registration**:
- A properly stamped or franked rental agreement is often a requirement for registering a firm, as it serves as proof of the business address.
- The registration authorities may ask for the original franked rental agreement during the registration process.

6. **Consultation**: It's advisable to consult with a local chartered accountant or legal advisor who is familiar with the stamp duty regulations in your state. They can provide specific guidance based on the current rates and requirements applicable to your situation.

By ensuring that the rental agreement is properly stamped or franked according to the applicable regulations, you can fulfill one of the necessary requirements for registering your firm.

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