- If you are looking to purchase a home using a home loan, check if you are eligible for Pradhan Mantri Awas Yojana (PMAY) - Credit Linked Subsidy Scheme (CLSS).
- This scheme covers most sections of the Indian society including Economically Weaker Sections (EWS), Low Income Group (LIG) and Middle Income Groups (MIG I and II).
- CLSS benefits differ depending on which section of the society you belong to.
- CLSS subsidy is restricted to the stipulated loan limits under each category. However, you can borrow a higher amount of loan based on your eligibility though this amount would not be eligible for interest subsidy.
- For more information and revisions to the regulations of the scheme, please refer to www.mhupa.gov.in
Home ownership is a key need for families. If you are not a home owner and intend to get financing for purchasing a home, then you may be eligible for Pradhan Mantri Awas Yojana (PMAY) - Credit Linked Subsidy Scheme. (CLSS). This scheme covers most sections of the Indian society including Economically Weaker Sections (EWS), Low Income Group (LIG)and Middle Income Groups (MIG I and II). You may be wondering what is PMAY subsidy? While PMAY is a broader scheme, CLSS provides subsidies in interest rate payable on home loans to make home buying more affordable.
Are you eligible for CLSS under PMAY?
In order to receive PMAY subsidy, you should meet these criteria:
- You should be residing in any of the statutory towns according to the Census of India 2011 and those notified subsequently. You plan to purchase or construct a house in such towns.
- Neither you nor any of your family members own a pucca house anywhere in India.
- Neither you nor any of any of your family members (spouse and unmarried children) should have availed of any assistance under any central schemes from the Government of India or under any component of the PMAY. 1
For the purposes of PMAY, adult earning member irrespective of their marital status will be considered a separate household.
What are the benefits of CLSS under PMAY?
CLSS offers a subsidy on the interest payable on your home loan subject to specified conditions. CLSS benefits differ depending on which section of the society you belong to:
Category: MIG I: You are considered MIG I if your annual household income is above Rs. 6 lakh but below Rs. 12 lakh and the house you are purchasing or constructing has a maximum carpet area of 160 sq. metres.2
Benefit: You receive subsidy on interest rate up to 4% on maximum home loan amount of Rs. 9 lakh.
Category: MIG II:You are considered MIG II if your annual household income is above Rs. 12 lakh but below Rs. 18 lakh and you are constructing or purchasing a house with a maximum carpet area of 200 sq. metres.
Benefit: You receive subsidy on interest rate up to 3% on maximum loan amount of Rs. 12 lakh.3
Category: LIG and EWS: LIG and EWS categories are defined as those whose annual household incomes are above Rs. 3 lakh but below Rs. 6 lakh. CLSS benefits are applicable if you are purchasing or constructing a home with a maximum carpet area of 60 sq. metres.A female family member should be the owner or co-owner of the house.
Benefit: You receive subsidy on interest rate up to 6.5%. The interest subsidy is limited up to a maximum loan amount of Rs. 6 lakh.
Tenure: For all categories, interest subsidy is available for home loan tenure up to 20 years.4
How does CLSS work?
As an example, assume you have taken a home loan of Rs. 9 lakh for 20 years at 9% interest rate. If you fall under the MIG I category, due to interest subsidy of 4%, you will pay an effective interest rate of 5%. Total subsidy on your home loan would be Rs. 2,35,068.
While you can borrow a higher amount of loan based on your eligibility, the maximum amount eligible forinterest subsidy under CLSS would beRs. 9 lakh under MIG I category. In the same way, while you can opt for a longer tenure loan, but the subsidy would only be available for a maximum tenure of 20 years. So, for instance, if you take a loan of Rs. 10 lakh for a tenure of 30 years, you will get subsidy for Rs. 9 lakh for 20 years. The balance Rs. 1 lakh will be charged at the regular home loan rates and you will pay the regular interest rates on the outstanding loan amount for the period beyond 20 years (i.e. for the balance 10 years).5
How to avail PMAY subsidy?
In order to claim subsidy under PMAY, your home loan should have been approved on or after January 1, 2017 and the scheme is valid till March 31, 2022 in case of EWS/LIG segments and March 31, 2020 for MIG segments. Subsidy does not have to be claimed by you in person; it will be taken care of on your behalf by the home loan provider. All you need to do is file a declaration confirming that you meet the eligibility criteria. On successful application, the lending institution will make the claim on your behalf and complete all the requisite formalities. Once the nodal agency such as the National Housing Bank approves the loan subsidy, the amount will be automatically credited to your home loan account upfront.6
To conclude, PMAY has made home ownership easier and cheaper for first time buyers.Note:
- Assessment of your eligibility to avail the benefits of CLSS is at the sole discretion of the Government of India. Contents herein are parameters outlined under the scheme for assessment of entitlement.
- For more information and revisions to the regulations of the scheme, please refer to www. mhupa.gov.in