The PMAY (Pradhan Mantri Awas Yojana) has been a much talked about move that has lent added impetus to the Indian real estate sector. PMAY is a pioneering project for affordable housing which was introduced with an aim towards creating Housing for All by 2022. The aim of the project is to offer homes to more than 20 million urban poor citizens within this timeline. This scheme was launched in the year 2015 with an aim towards ensuring that the poorer sections in urban zones get homes of their own while offering financial support to those who cannot afford the total cost of building their own residential properties. Another objective of the scheme is to offer homes to the EWS (Economically Weaker Sections).
PMAY has already enabled home ownership for several thousands of people. Additionally, the Government has lowered GST to 8% from 12% on affordable homes. Those purchasing homes for the very first time will only have to pay GST of 8% provided the buyer applies for a home loan under the CLSS (Credit Linked Subsidy Scheme) of the PMAY. The family income of the applicant should not be more than Rs. 18 lakh annually and the maximum eligible carpet area is 150 sqm. The tax benefit will also be offered in case of low-cost housing ventures. Those not meeting this criteria will have to shell out GST of 12%.
As per the eligibility criteria requirements of the PMAY, here’s what you need to know:
- EWS (Economically Weaker Section)- Those with annual household income lower than Rs. 3 lakh.
- LIG (Light Income Group)- Those with household income between Rs. 3-6 lakh.
- MIG1 (Medium Income Group 1)- Those with annual household income lower than Rs. 12 lakh and can take loans up to Rs. 9 lakh for construction of their homes.
- MIG2 (Medium Income Group 2)- Those with annual household income between Rs. 12-18 lakh and can take loans up to Rs. 12 lakh.
- Minorities- This includes those eligible under OBC/SC/ST and other relevant minority classifications. They have to provide caste and income certificates accordingly.
- Women- Women are eligible under the EWS and LIG categories in case they apply under the PMAY scheme for housing subsidy.
Additionally, there is an added requirement that has to be met. In case of the beneficiary being a family, this must comprise of the husband, wife and unmarried children. No person from the family should have a home in their own names. This is something that should be kept in mind above everything else.
In case of home loans for the EWS/LIG category, the loan amount is kept at Rs. 3 lakh and the eligible loan amount for the subsidy is the same, i.e. Rs. 3 lakh. The balance loan is Rs. 1, 66, 360 while the interest subsidy is Rs. 1, 33, 640. The initial EMI will be Rs. 2, 895 while the lowered EMI post subsidy credit will be Rs. 1, 605. The monthly savings attained by eligible customers under this scheme will be a handsome Rs. 1, 290 and this equates to annual savings of Rs. 15, 480.
For those in the LIG category, there is eligibility for loan amounts of Rs. 6 lakh and this is the same amount eligible for the subsidy. Now, the balance loan amount works out to Rs. 3, 32, 720 since the interest subsidy is Rs. 2, 67, 280. The initial EMI will be Rs. 5, 790 while the lowered EMI post monthly credit will be Rs. 3, 211. The annual savings are huge, amounting to Rs. 30, 948 and this equates to monthly savings of Rs. 2, 579.
For loan amounts of Rs. 10 lakh, the eligible subsidy amount is Rs. 6 lakh in this category and the balance loan is Rs. 7, 32, 720 since the interest subsidy works out to Rs. 2, 67, 280. The initial EMI will be Rs. 9, 650 and the lowered EMI post credit of subsidy will be Rs. 7, 071. Thus, the monthly and annual savings will be the same as the earlier slab. In the MIG-1 category, the income of the household is taken as Rs. 12 lakh and the maximum loan tenor is 20 years. Rs. 9 lakh will be the eligible loan amount for getting this subsidy under CLSS. The interest subsidy per year is 4% and the maximum interest subsidy is Rs. 2.35 lakh. The rate of discount for working out the NPV (Net Present Value) calculation of subsidy is 9%. The maximum carpet area for the dwelling unit should be 90 sqm. The monthly EMI will be Rs. 5, 834 with interest subsidy while it will be approximately Rs. 7, 894 without interest subsidy at a rate of 8.65%.
In case of the MIG-2 category, the annual household income is up to a maximum of Rs. 18 lakh and maximum loan tenor is 20 years. The interest subsidy per year is 3%. The eligible loan amount for interest subsidy is Rs. 12 lakh and the maximum interest subsidy is Rs. 2.3 lakh. The rate of discount for NPV subsidy calculation is 9%. The maximum eligible carpet area is 110 sqm for the dwelling while monthly EMI at 8.65% is Rs. 8, 059 with interest subsidy and Rs. 10, 528 without interest subsidy.
Several leading banks and financial institutions have already partnered with the Ministry of Housing & Urban Poverty Alleviation for offering loans for PMAY construction. These loans come at lower rates since the Government offers interest subsidies and other benefits. The family of the applicant, as stated earlier, should not own any home in any area of the country and in case of a married couple, either joint/single ownership transactions are permitted. Both options will get only a single subsidy. The family of the applicant should not have taken any benefits under housing linked schemes released earlier by the Indian Government. The PMAY is an innovative and helpful scheme that is bound to make home ownership more attainable for a larger number of people throughout the country.