PMAY Credit Linked Subsidy Scheme (CLSS) Benefits And Calculation Of Interest Subsidy

Home Loan

Before 2015, middle-income Indian families had to face immense financial strain when availing of a home loan. However, after the launch of the Credit Linked Subsidy Scheme (CLSS), borrowers do not need to face the same issue. CLSS allows middle-income groups to avail of home loans at discounted interest rates under Pradhan Mantri Awas Yojana (PMAY). The same component offers home loans at discounted rates to lower-income groups (LIG) and economically weaker sections (EWS).

Read on to know what is Credit Linked Subsidy Scheme (CLSS) is, its features, eligibility criteria, guidelines and terms, benefits, how to apply for CLSS and more. 

What is PMAY Credit Linked Subsidy Scheme? 

The Government of India launched the PMAY scheme in 2015 to help the financially backward people living in urban areas to purchase affordable housing. This Credit Linked Subsidy Scheme is a central scheme under the Pradhan Mantri Awas Yojana. Under this scheme, the Indian Government provides interest subsidies to financially disadvantaged people when they take out a home loan. Moreover, the interest subsidy is credited to beneficiaries’ loan accounts via primary lending institutions. As a result, beneficiaries get access to effective housing loans with a reduced EMI. 

PMAY CLSS Features

The key features of CLSS are:

• Interest is offered only on the first house purchase. 
• The beneficiary or any of the family members of the beneficiary cannot own a “Pucca” house in any part of the country.
• Individuals taking a home loan up to Rs 12 lakh for an MIG II house can get an interest subvention of 3-6.5% interest subsidy.
• Applicants receive reduced EMIs because of upfront deduction of interest subsidies. 
• In order to cater to a wide range of customers, there are schemes available under categories like EWS, LIG, MIG I and MIG II.
• Individuals can avail of this scheme from all major public and private sector banks.

Also Read: Pradhan Mantri Awas Yojana (PMAY): Benefits, Features And More

Eligibility Criteria for CLSS Scheme 

To avail of CLSS benefits, borrowers must come under one of the following income groups: 

Additionally, the annual household income for EWS must not exceed Rs.3 lakh. 

CLSS scheme eligibility also rests on the following factors:

• A female member of the household must be a sole or joint owner of the property in question.
• The property you choose should be in one of the statutory towns as per Census 2011.
• CLSS scheme benefits are available to only first-time homebuyers. Therefore, you cannot hold any other pucca property while applying for this scheme.
• Lastly, if you have availed of assistance under government housing schemes in the past, you cannot qualify for CLSS.

What are the Guidelines for PMAY CLSS Scheme?

The guidelines mentioned for the PMAY CLSS scheme are as follows:

• Maximum subsidy an individual can avail of under this scheme is 6.5% for a duration of 20 years 
• Subsidies beyond the 20 years period will not be approved  
• No deduction will be provided in the loan amount or cost of the property
• According to an amendment made on 15.03.2018 the adult earning member will be considered a separate household irrespective of one’s marital status. 
• In the case of married couples, either the spouse or both in joint ownership will be eligible for a single house 
• A discount rate of 9% is considered to calculate the NPV of interest subsidy 
• Woman ownership is not required for the construction or extension of the house
• Aadhaar card is required for the beneficiary and family members of the beneficiary in order to available housing in MIG category 

CLSS for Economically Weaker Section and Lower Income Group

While CLSS is available to EWS, LIG and MIG, the terms differ considerably for each group. After knowing CLSS eligibility, make sure you go through the terms for different income groups.

Here are the specific terms for lower-income group applicants under PMAY CLSS:

• The property’s carpet area cannot exceed 60 sq. metres.
• Annual household income must range between Rs. 3 lakh and Rs. 6 lakh.
• Interest rate subsidy is 6.5% for LIG beneficiaries.
• The maximum subsidy amount is Rs. 2.67 lakh
• Under CLSS, you can opt for a repayment tenure of up to 20 years if you belong to the LIG.

A similar set of terms are applicable to economically weaker section borrowers. These are as follows:

• Annual household income must not exceed Rs.3 lakh. 
• The carpet area of the chosen unit should not measure more than 30 square metres.
• Interest subsidy for EWS is 6.5%.
• The maximum loan tenure is 20 years.
• The maximum subsidy amount is Rs.2.67 lakh.

The maximum loan amount eligible for subsidy in the case of borrowers belonging to LIG and EWS categories is Rs.6 lakh. 

Terms of CLSS Scheme for Middle Income Groups

As stated previously, the home loan interest subsidy scheme is available to both classes under the middle-income group.

Here are the terms and conditions for middle-income group I beneficiaries under CLSS:

• The carpet area of the property should not exceed 160 sq. metres.
• The maximum loan amount eligible for subsidy is Rs.9 lakh.
• Interest rate subsidy is capped at 4%.
• The maximum interest subsidy amount is Rs.2.35 lakh.

For MIG-II, the following terms are applicable –

• The unit’s carpet area must not exceed 200 sq. metres.
• A subsidy is available on a loan amount of up to Rs.12 lakh.
• You can claim a 3% interest rate subsidy under this income group.
• Rs.2.30 lakh is the maximum subsidy amount available to this particular group.

Keep in mind that the maximum tenure under PMAY CLSS is 20 years, regardless of your income group.

Calculation of Interest Subsidy under CLSS

To understand the calculation, consider this example:

Suppose you belong to MIG-I and you decide to avail a home loan of Rs.8 lakh. The interest rate is 8.5% and the tenure you choose is 20 years. Under normal circumstances, you would have to pay Rs.6,943 as EMI for this loan.

However, the MIG-I group is eligible for a subsidy amount of Rs.2.35 lakh. Therefore, your loan principal would be Rs.8 lakh – Rs.2.35 lakh, which is Rs.5.65 lakh. Your actual EMI would be based on this new principle of Rs.5.65 lakh. Thus, the EMI would be Rs.4,903.

Besides learning about CLSS, borrowers should also choose their lenders carefully. Navi offers hassle-free home loans of Rs.10 crores, with interest rates starting at 7.93%. You can repay the loan within a tenure of up to 25 years. For more information, download the Navi app.

CLSS Helpline Numbers

If you have any doubt regarding CLSS or any of its features, dial one of the following toll-free numbers – 

• National Housing Bank – 1800113388, 1800113377
• Housing and Development Corporation – 1800116163

How to Avail CLSS Scheme Benefits

When looking to avail CLSS benefits, you need to follow these steps:

Step 1: Contact a lender offering PMAY-linked home loans.

Step 2: Fill up a CLSS form with relevant details and submit it to the lending institution.

Step 3: Submit necessary documents too.

After this process is complete, the housing loan amount will reach your account soon. Your lender will also begin coordinating with central nodal agencies to disburse your subsidy amount.

Documents Required for Applying to PMAY CLSS Scheme

The documents required to apply for the PMAY CLSS scheme are:

• PAN card
• Identity proof- Voter Id card, Aadhaar card, Driving license etc.
• Address proof- Utility bill, Telephone bill, Rent agreement etc. 
• Last 3 months’ salary slip 
• Latest salary statement 
• Form 16 
• Property documents- Sale agreement, Allotment letter etc.   
• Documents related to the latest loan repayment if applicable 

Key Points of PMAY CLSS

If you are looking to avail benefits under this scheme, here are some factors to keep in mind:

• You can claim a CLSS scheme on home loans to construct a new house. Similarly, benefits are available on loans taken for adding a new kitchen, balcony or room to your existing property.
• There is no cap on the maximum loan amount. However, a limit applies to the maximum principal amount on which the subsidy is available.
• Under PMAY, preference is given to female applicants and senior citizens. 

Also Read: EMI Calculator for Home Loans Up To Rs.50 Lakh

Final Word

The Pradhan Mantri Awas Yojana has made affordable housing a reality in India. With attractive subsidies on home loans, more individuals can afford to avail such credit without facing financial hurdles. Still, you should be familiar with all aspects of the CLSS scheme to maximise your benefits from it.

FAQs on CLSS Scheme

Before you go…

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Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.