HT Photo
HT Photo

Middle income groups get housing subsidy

The Credit Linked Subsidy Scheme (CLSS) under PMAY will benefit households with annual incomes between Rs6 lakh and Rs18 lakh

On 22 September, for the Pradhan Mantri Awas Yojana (Urban) (PMAY), central government extended the benefit of interest subsidy on home loans for households who fall in the middle income group (MIG). This will benefit households with annual incomes between Rs6 lakh and Rs18 lakh. This interest subsidy scheme was to close at the end of December 2017, but it has now it has been extended for another 15 months—till March 2019. Let’s read more about the scheme.

The Credit Linked Subsidy Scheme (CLSS) under PMAY for MIG households was announced by Prime Minister Narendra Modi on 31 December 2016. Under CLSS, middle income beneficiaries with annual household income between Rs6 lakh and Rs12 lakh (categorised as MIG I) would get an interest subsidy of 4.00% on a 20-year loan component of up to Rs9 lakh.

Those with annual household incomes of more than Rs12 lakh and up to Rs18 lakh (categorised as MIG II) would get interest subsidy of 3.00% on a 20-year loan component of up to Rs12 lakh. Additional loans beyond the specified limit, if any, will be at the non-subsidized rates.

For this scheme, the annual family income will comprise of incomes earned by husband, wife, unmarried sons and/or unmarried daughters. Also, the scheme is applicable only to those families where none of the family members own a pucca house (an all-weather dwelling unit) in their name in any part of India. CLSS for MIG I is available for acquiring or constructing a house (including re-purchase) with carpet area of up to 90 square meters. For MIG II this limit is 110 square meters. The house must have basic civic infrastructure such as water, sanitation, sewerage, and access to road and electricity.

The subsidy was announced by the government for meeting the ‘Housing for All’ target in urban areas by 2022. “Subsidies are beneficial for providing housing to the less economically privileged segments. This is a price-sensitive segment where even small downward variations in overall cost of acquisition can make a big difference. Coupled with reduced home loan rates, subsidies can boost the demand in (this) segment," said Ramesh Nair, chief executive officer and country head, JLL India.

If you intend to buy a house or help somebody to buy a house, and want to know how much subsidy you are eligible for, you can calculate the subsidy amount here. For a more detailed calculator, and other details as well, go here. Because the CLSS subsidy varies by category of borrower, you will need to choose your category where you will find the applicable calculator. Here, enter the details like loan amount, applicable interest rate and tenure of loan; and the calculator will provide you the subsidy amount you can avail. EWS and LIG beneficiaries can avail a maximum subsidy of Rs2.67 lakh, whereas for MIG I and MIG II the subsidy limit is Rs2.35 lakh and Rs2.30 lakh respectively.

You can apply for a housing loan under CLSS from listed primary lending institutes (PLIs) under the scheme. You can find the list of PLIs here. Apart from the common loan application documents, no additional documents are required.

However, a self-declaration of not owning a pucca house, in the described format, has to be submitted to the lending institution to avail the subsidy. The interest subsidy will be credited upfront to the loan account of the beneficiaries through the PLI, resulting in reduced effective housing loan and equated monthly instalments (EMIs). Remember that, in case the borrower—who has taken a housing loan and availed an interest subsidy under this scheme—later on switches to another lending institution for balance transfer, the beneficiary will not be eligible to claim the benefit of this scheme again.