CLSS EWS/LIG and MIG Schemes under PMAY

Last Updated : April 27, 2022, 2:56 p.m.

In the recently concluded Press Conference, Nirmala Sitharaman announced the extension in the last date of Pradhan Mantri Awas Yojana (PMAY) Credit-Linked Subsidy Scheme (CLSS) for the individuals both in category MIG-I and MIG-II.

Before today, the last date for anyone who wants to enjoy the benefits of PMAY CLSS scheme was March 31, 2020. After the extension, you can avail the benefits till March 31, 2021. However, the date will be March 31, 2022 for the LIG/EWS category.

The main objective behind this extension is to make sure that people coming from the lower strata of the middle class families can be benefited more. According to the estimation, more than 2.5 lakh families from the middle class background will be able to enjoy the benefits from this extension of the date. The annual income must be between INR 6 lakh to INR 18 lakh.

CLSS comes under the Pradhan Mantri Awas Yojana (PMAY) – Housing for All (Urban) by 2022 scheme and is for the beneficiaries of Economically Weaker Section (EWS), Low Income Group (LIG) and Middle Income Group (MIG). Below you will read the following details about the interest subsidy scheme:

• Updated carpet area under PMAY MIG I and II
• Income criteria for CLSS EWS/LIG/MIG I & II
• Loan limit for interest subsidy
• Interest subsidy allowed under each scheme

Government increases Carpet Area up to 2,100 sq. ft. under PMAY

The housing and urban affairs ministry has increased the carpet size for affordable housing under Pradhan Mantri Awas Yojana for MIG-I and MIG-II by 33%. Now, the carpet area has changed from 120 to 160 square meters and 150 to 200 square meters respectively. From now onwards, if your annual income is up to INR 18 lakh, you can now avail of INR 2.3 lakh up front interest subsidy even for buying a 2,100 sq feet flat or house with three or four BHKs. The apartment size may not be within the reach of a person earning INR 18 lakh in metro city but the initiative is taken for the beneficiaries living in Tier-3 and Tier -4 cities.

How much will you save under CLSS?

CLSS will surely give you the chance to pay less on your home loan be it under CLSS MIG scheme or CLSS LIG/EWS scheme. The interest subsidy under each scheme is different and hence the savings will also differ. So, let us take an example to see how much will you save if you take a home loan for the loan amount up to INR 35 lakhs for the tenure of 20 years at 8.35% per annum under CLSS LIG/EWS scheme and CLSS MIG (income class up to INR 18 lakhs).

CLSS MIG

In the Guidelines for CLSS (MIG), the tenure of loan has been stipulated to be 20 years or that preferred by the beneficiary, whichever is lower. The total interest subsidy accruing on these loan amounts will be paid to the beneficiaries up front in one go there by reducing the burden of Equated Monthly Instalment (EMI). Under this scheme, the customers can get the interest subsidy of up to 4% for the 20 years home loan.

While defining the beneficiary family as comprising of wife, husband and unmarried daughters and sons, the Guidelines, in an acknowledgement of the aspirations of the youth, have made even unmarried and earning young adults eligible for taking the benefit of interest subsidy under CLSS (MIG), for acquisition/construction of a new house including repurchase. Interest subsidy will be provided on loans for construction/acquisition of house with the carpet area of 160 sq. meters from the existing size of 120 sq.meters by those earning INR 12 lakh per annum. Also, the carpet size for the income group earning INR 18 lakh per year has been changed from 150 sq. meters to 200 sq. mt..

In addition to this, there are add-on benefits for women with overriding preference to widows, single working women, persons belonging to Scheduled Castes and Scheduled Tribes, Backward Classes, Differently abled and Transgender people. Let us have an overview of the key features of this scheme:

Updated Key Features of CLSS MIG Scheme

CLSS LIG/EWS

While the new CLSS (MIG) covers people with income of up to INR 12 lakh and INR 18 lakh per year, the CLSS component of PMAY (Urban) launched in June, 2015 and applicable to Economically Weaker Sections (EWS) and Low Income Group (LIG) covers urban poor with income levels of INR 3 lakh and INR 6 lakhs per year respectively. Under CLSS(EWS/LIG), interest subsidy of 6.50% is being provided on a loan of up to INR 6 lakhs. Tenure of this loan is now increased to 20 years from the earlier 15 years, to enable easy repayments. The carpet area of houses constructed should be up to 30 square metres and 60 metres for EWS and LIG, respectively in order to avail this credit linked subsidy facility. The beneficiary can build a house of larger area but the interest allotment would be limited and applicable to first INR 6 lakhs only. Let us have an overview of the key features of this scheme:

Key Features of CLSS EWS/LIG Scheme

Who facilitates CLSS MIG and CLSS LIG/EWS?

Small Finance Banks and Non-Banking Finance Company­ Micro Finance Institutions also have been recognized to function as Primary Lending Institutions to widen the scope of implementation of CLSS (MIG) in addition to Scheduled Commercial Banks, Housing Finance Companies, Regional Rural Banks, State and Urban Cooperative Banks for accepting applications directly from beneficiaries and advancing loans under the scheme. NHB and Housing and Urban Development Corporation (HUDCO) have been designated as Central Nodal Agencies (CAN) for implementation of CLSS for both MIG and EWS/LIG who would reimburse interest subsidy to Primary Lending Institutions (PLIs) based on the loans advanced to beneficiaries by PLIs. PLIs include Scheduled Commercial Banks, Housing Finance Companies, Small Housing Banks, State and Urban Cooperative Banks, Regional Rural Banks and NBFCMFI.

How to apply

The beneficiaries eligible for interest subsidy under CLSS MIG or CLSS LIG/EWS can directly apply to PLIs and PLIs after due verification of applications will sanction loans and thereafter claim the subsidy from CNAs. You can get this benefit till March 2019.

Processing Fees

No processing fee will be charged by PLIs from the applicants under CLSS. So, you can focus on the EMIs and enjoy this benefit.

GST on Affordable Housing

GST Council has reduced the GST on affordable housing schemes from 12% to 8% which means if someone is purchasing an Under Construction property, and is eligible for PMAY, he shall be liable to pay a concessional GST on the property. The concession granted is 4% and is only available for those who are eligible under PMAY subsidy scheme. If not, you are not eligible to get the interest subsidy on home loans and will have to pay the complete 12% tax.

The scheme was released by Minister of Housing and Urban Poverty Alleviation Shri M.Venkaiah Naidu. The interest subsidy of 4% on housing loans of up to INR 9 lakhs of those with an income of INR 12 lakh per year and of 3% on housing loans of up to INR 12 lakhs of those earning INR 18 lakhs per year under the CLSS-MIG scheme is being offered through the scheme.

Middle Income Groups (MIG) with annual incomes of above INR 6 lakhs and up to INR 18 lakhs per year are eligible for interest subsidy on housing loans under the new CLSS (MIG) which can be availed till March 2019. As per CLSS (EWS/LIG), the beneficiaries of Economically Weaker Section (EWS) and Low Income Group (LIG) seeking home loans or housing loans from Banks, Housing Finance Companies (NBFCs) and other such institutions would be eligible for an interest subsidy at the rate of 6.50% interest subsidy on a loan of up to INR 6 lakh and additional loans beyond INR 6 lakhs (if any) will be at non-subsidized rate.

Minister of State for HUPA Rao Inderjit Singh believes that Housing for All Mission is the most important initiatives of the Government to ensure a decent house for all by 2022. Since the middle-income groups are better equipped to take advantage of the interest subsidy scheme in quick time and to enable meeting the Housing for All target by 2022, implementation of CLSS (MIG) is initially envisaged for one year.

Speaking on the occasion, Shri Naidu said that Middle-Income Groups make a substantial contribution to the economic growth of the country besides paying taxes and deserved support to fulfill the dream of owning a house which is a basic and genuine aspiration. He further said that large-scale incentivization of affordable housing will boost real estate sector resulting in employment generation as well. He urged the banks and other lending institution to adopt a pro­active approach to reach the benefits to MIG people.

Shri Sriram Kalyanaraman, MD, and CEO of National Housing Bank said that during 2015-­16, against total new bookings of INR 28.90 lakh units with loans of up to INR 10 lakhs each, Public Sector Banks and Housing Finance Banks advanced loans of INR 9.50 lakh crore and accounted for 64% of total bookings.

Source:Press Information Bureau (PIB)

Note – PMAY CLSS scheme expired on March 31, 2022