PMAY: Cabinet increases carpet area eligible for interest subsidy
Published: Nov 16, 2017
By TIOLCORPLAWS News Service
NEW DELHI, NOV 16, 2017: The Union Cabinet today approved the increase in carpet area of houses, eligible for interest subsidy under the Credit Linked Subsidy Scheme (CLSS). This measure was meant for the Middle Income Group (MIG), under Pradhan Mantri Awas Yojana (Urban). The Ministry of Housing and Urban Affairs implemented CLSS under the Pradhan Mantri Awas Yojana (Urban), from 1.01.2017, with the objective of increasing the benefits for poor people availing housing loans, and introduced a new interest subsidy scheme for housing loans for the MIG. Thereby, to further enhance the scope, coverage and outreach of the Scheme, the Cabinet annonced the following measures -
i. increasing the carpet area in the MIG I category of CLSS from the existing 90 square metre to "up to 120 square metre" and, increasing the carpet area in respect of MIG II category of CLSS from the existing 110 square metre to "up to 150 square metre" ; and
ii. the above change made effective from 01.01.2017 i.e. the date the CLSS for MIG came into force.
The CLSS for MIG may be seen as a pro-active step to meet the challenge of urban housing shortage. It would also be a pioneering step enabling the MIG to access the benefits of an interest subsidy scheme. The CLSS for MIG covers two income segments in the MIG - Rs. 6,00,001 to Rs. 12,00,000 (MIG-I) and Rs. 12,00,001 to Rs. 18,00,000 (MIG-II) per annum. In the MIG-I, an interest subsidy of 4% was provided for loan amounts up to Rs. 9 lakhs, whereas in MIG-II, an interest subsidy of 3% was provided for loan amount of Rs. 12 lakhs. The interest subsidy would be calculated at 9% NPV over a maximum loan tenure of 20 years or the actual tenure, whichever was lesser. Housing loans above Rs. 9 lakhs and Rs. 12 lakhs would be provided at non-subsidized rates. The CLSS for MIG would be currently effective up to 31.03.2019.
The impact of increasing the carpet area of houses eligibe for interest subsidy under the CLSS for MIG, includes -
i. The limit of 120 sq m. and 150 sq m. would be seen as a reasonable enhancement and would cater to the market generally scouted by the MIG belonging to the two income categories specified in the scheme;
ii. The increase in carpet area would provide the Ml category individuals a wider choice in Developers' projects; and
iii. The increased carpet area would boost sale of ready made flats in the affordable housing segment.
