Govt extends benefit of interest subsidy on home loans under the Credit Linked Subsidy Scheme for households with annual incomes between ₹6 lakh and ₹18 lakh
The government on Thursday extended till March 2021 the benefit of interest subsidy on home loans under the Credit Linked Subsidy Scheme (CLSS) for households that fall in the middle-income group (MIG) with annual incomes between ₹6 lakh and ₹18 lakh. The scheme was introduced in May 2017 and ended on 31 March 2020.
While announcing the extension at a press conference, finance minister Nirmala Sitharaman said the scheme has benefited 330,000 middle-class families so far and is expected to benefit another 250,000 families in FY21. According to government estimates, the subsidy scheme will give a ₹70,000 crore boost to the housing sector. Besides creating jobs, it will also stimulate demand for steel, cement, transport and other construction material.
Most experts welcomed the government move. “This will help push demand for affordable housing," said Anuj Puri, chairman, ANAROCK Property Consultants Pvt. Ltd, a real estate consultancy. According to data from ANAROCK, currently, there are 1.56 million under-construction units across the top seven cities. Of these, nearly 39% are in the affordable segment priced below ₹40 lakh.
Details of the scheme
CLSS, which comes under the Pradhan Mantri Awas Yojana (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 ₹6 lakh and ₹12 lakh (categorized as MIG I) get an interest subsidy of 4% on a 20-year loan. However, the subsidy will available only on a loan amount of ₹9 lakh even if the total loan amount is higher than that.
Those with annual household incomes of more than ₹12 lakh and up to ₹18 lakh (categorized as MIG II) get interest subsidy of 3% on a 20-year loan. In this case, you can avail of the subsidy up to a loan amount of ₹12 lakh even if the total loan amount is higher.
Additional loans beyond the specified limit, if any, are at non-subsidized rates.
Under the scheme, the annual family income comprises incomes earned by the husband, wife, unmarried sons and 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 names in any part of India.
CLSS for MIG I is available for acquiring or constructing a house (including re-purchase) with a carpet area of up to 160 square metres. For MIG II, this limit is 200sq.m. The house must have basic civic infrastructure such as water, sanitation, sewerage and access to road and electricity.
How to calculate the benefit
If you intend to buy a house and want to avail the subsidy, you can calculate how much subsidy you are eligible for here. To know more about the scheme, eligibility and process, click here.
Remember that CLSS subsidy varies by the category of borrower, amount and tenure of the loan and the interest rate.
Those in the economically weaker section (EWS) and low-income group (LIG) categories can get a maximum subsidy of ₹2.67 lakh, whereas for MIG I and MIG II the subsidy limit is ₹2.35 lakh and ₹2.30 lakh, respectively.
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