The Pradhan Mantri Awas Yojana (PMAY) scheme is an initiative undertaken by the central government in June 2015, is aimed at providing affordable housing solutions to people belonging to economically weaker sections or lower and middle-income groups under its Credit-Linked Subsidy Scheme (CLSS). The scheme’s aim is to provide housing to at least 20 million people by the year 2022.
In order to support the efficient development of low-cost houses, this ambitious project holds a plethora of offers for realty developers, which targeted at supporting them to combat their financial instabilities. Let’s understand the key features of this ambitious project and how it is beneficial for homebuyers and the real estate market at large:
An overview
The PMAY is a landmark step taken by the Central government to make housing options accessible to all income groups. The scheme was originally meant to cover people in the Economically Weaker Sections (annual income not exceeding ₹3 lakh) and Lower Income Groups (annual income not exceeding ₹6 lakh) sections, but now it has been extended to the mid-income group (MIG) as well.
Two Sections of PMAY Scheme
In an attempt to ensure better implementation, this mammoth scheme has been divided into two sections - PMAY Urban and PMAY Gramin:
PMAY Urban
Under the PMAY Urban section, the focus is on the residents of urban towns and cities who are living in rented houses or temporary housing options. In this scheme, temporary housing units will be replaced with pucca or permanent houses which will be delivered to the slum residents or other groups like LIG, EWS and MIG segments. Under the PMAY (Urban) programme, the budgeted estimate for the capital outlay in budget 2018 is Rs 31,500 crore.
PMAY Gramin
Under the PMAY Gramin section, the focus is on the resident of rural areas in India. Those residing in villages and living in rented houses can apply to this scheme. It is also applicable for those who require loans for additional construction within their existing home. Under the PMAY (Gramin), 49 lakh houses will be constructed and the budgeted estimate for the capital outlay in budget 2018 is Rs 33,000 crore.
Eligibility criteria for the PMAY Scheme
In order to take benefits of the loan subsidies offered under the PMAY scheme, individuals need to fall under the below categories:
- EWS or Economically Weaker Section: This group includes individuals whose annual income is below INR 3 Lakh.
- LIG or Light Income Group: This group includes individuals whose annual household income falls between INR 3 lakh to 6 lakh.
- MIG1 or Medium Income Group: The MIG 1 section includes individuals who earn an annual household income between INR 6 to 12 lakhs annually. They can avail loans up to INR 9 lakhs for additional construction on their house.
- MIG 2 or Medium Income Group: The second level of the Medium Income Group includes individuals who earn an annual income of INR 12 to 18 lakh. They can also apply for a loan of up to INR 12 lakh.
The Credit Linked Subsidy Scheme (CLSS)
PMAY scheme has introduced the Credit Linked Subsidy Scheme (CLSS) through which individuals can avail significant subsidies on loans availed for construction, expansion and improvement of existing houses.
Eligibility criteria for CLSS
To take benefits of the subsidies that come under CLSS, individuals need to meet the following criteria:
- The person who is applying for the subsidy should not own a permanent house nor can any member of his/her family own a house in any part of India.
- In case of a married couple, spouses under either their names or their individual names will be eligible for a single subsidy.
- The beneficiary of the loan should not have any past record of availing any housing loan scheme by the central government in the past.
- The family availing of the loan will include husband, wife and unmarried children.
In case of the MIG category, any individual within the family who is drawing an income will be treated as a separate family irrespective of his/her marital status.
Recent Changes Made Under The PMAY:
Govt cuts GST on affordable homes for first time home buyers
The PMAY is playing a significant role in empowering more people in India to fulfil dreams of home ownership. In order to make things smooth for the first time home buyers, who are looking to avail a home loan through PMAY, the government has reportedly cut GST rate from 12% to 8% for houses purchased using the CLSS under the scheme.
To avail a home loan through the CLSS, individuals need to meet the certain criteria. For instance, a first time homebuyer’s family income should not be above Rs.18 lakh per annum and the maximum carpet area eligible for the subsidy is 150 square metres (1,615 sq ft). If an applicant does not meet the aforementioned criteria, then he will have to pay 12% GST.
Why PMAY is important?
Today, while realty developers in India’s metropolitan cities are sitting on lakhs of unsold properties costing up of ₹50 lakh, India is estimated to have a scarcity of around 20 million housing units needed by the rural and urban poor population, at far lower price points of ₹5-15 lakh. The PMAY scheme aims to address this issue. The PMAY will hopefully boost India’s real estate sector to reduce its traditional obsession with rich home buyers in the cities.
Conclusion
These days, more and more realty developers are concentrating on affordable housing projects that fulfil the needs of housing under PMAY scheme. Further, with the strengthening of implementing RERA and GST in Real estate sector is going in favor of the aspiring home buyers. With the help of the Credit Linked Subsidy Scheme (CLSS) benefits under PMAY scheme, affordability is going to improve. Therefore, if you are also considering the purchase of your first property, but still worried about home loan interest rates, now is the right time to check out your eligibility under this scheme.