Some of the documents that stamp duty must be paid for are in regard to buying or selling a house, setting up a business agreement and registering insurance policies among others. An added benefit of paying stamp duty is that it converts the documents into proper and legal instruments or documents, which means that the documents can now be submitted in court. If the documents are not stamped, then they are usually not considered legal and hence cannot be submitted in court.

Franking, on the other hand, is the process of actually getting the documents stamped. This refers to any types of marks or stamps that are affixed to a paper to indicate that the postage has been paid or does not need to be paid. Over time, the process was utilized for legal documents, in which the term refers to any stamps or marks on legal documents that indicate that any fees or taxes applicable on those documents have been paid.

In terms of stamp duty, franking refers to the process of getting the documents marked or stamped which indicates that the documents are legal as the stamp duty levied on the documents has been paid. One has to first prepare the documents. These documents then need to be taken to a bank, or franking center. Once the stamp duty is paid, the center will mark the documents to indicate that the stamp duty has been paid. This process is called franking. One has to sign the documents after franking them.

Alternately, one can also buy printed stamp papers. These are documents that have already undergone the process of franking. The payable stamp duty is included in the cost of the papers. Hence, these documents are ready to be just signed and registered. They make the process quite easy, but can only be used in certain situations.  

Comparison between Stamp Duty and Franking:

Reference: Oxford Dictionaries (Stamp Duty and Franking), Wikipedia (Stamp Duty and Franking),
Bank Bazaar, Be Money Aware (Stamp Duty and Franking)
Image Courtesy: accountshouse.co.uk, indiamart.com