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Ministry of Housing and Urban Poverty Alleviation (MoHUPA) is providing first-time home buyers an interest subsidy on home loans for acquisition/construction of houses (including re-purchase). Credit Linked Subsidy System (CLSS), launched as part of the government’s Pradhan Mantri Awas Yojana (PMAY) is aimed at benefiting people belonging to the economically weaker section (EWS), low income group (LIG), middle income group-I (MIG-I), and middle income group-II (MIG-II). The scheme offers interest subsidy on the loan taken for the purchase or construction of a house.

Earlier, the scheme catered to Economically Weaker Section (EWS) and Lower Income Group (LIG) only. However, this scheme has been extended to Middle Income Group (MIG) in the financial budget 2017-18. Ministry of Housing and Urban Affairs has decided to increase the carpet area after taking inputs from various stakeholders. As a result, more people would become eligible to benefit out of the scheme. This move of the government has widened the scope of eligibility for claiming subsidy under the Credit-Linked Subsidy System (CLSS) in the Middle Income Group (MIG) category. Earlier CLSS benefits were denied to potential beneficiaries as they were buying flats or houses where the carpet area exceeded the limit of 120 square metre and 150 square metre for MIG I and MIG II categories respectively. 10 things you must know

What is carpet area?

The carpet area – or the area enclosed within the walls excluding wall thickness – has been raised to 160 square metres for MIG -I and 200 square metres for MIG-II, according to the Ministry of Housing and Urban Affairs.

Then and now

Now that the Ministry of Housing and Urban Affairs has declared for an increase of 33% on carpet area, the limit for MIG-I is 160 sq.m. and MIG-II is 200 sq.m. Earlier it was 120 square metres and 150 square metres for MIG-I and MIG-II respectively.

Criteria for classification

Families with annual household income between Rs. 6 lakhs and Rs. 12 lakhs fall under MIG I category, while those with annual income between Rs. 12 lakhs and Rs. 18 lakhs fall under MIG II category.

Eligible loan amount and interest subsidy

The eligible loan amount for MIG I is Rs. 9 lakhs and the upfront amount for subsidy is Rs. 2,35,068. The interest subsidy is four per cent. However, eligible loan amount for MIG II is Rs. 12 lakh and the upfront amount for subsidy is Rs.2,30,156. The interest subsidy is three per cent

Loan tenure

Maximum loan tenure for both MIG I and MIG II are 20 years.

Key benefits

• More middle-income customers will become eligible to avail subsidy for to buy homes that are biggre and will get the benefits provided under the Pradhan Mantri Awas Yojana (Urban).
• Increasing the number of beneficiaries and the carpet area will boost the construction activity, thereby accelerating the growth of housing sector forward.
• Boosting the construction sector pave way to increased activity on the supply side. More construction activities trigger the demand for cement, steel, machinery and other allied sectors.
• More construction activity in the urban areas like building new homes, would result in creation of more jobs for both skilled and unskilled workers.
• This initiative is expected to result in enhanced economic activity that would contribute to improvement in the demand side.
• More MIG customers are likely to qualify for subsidy and avail the benefits provided under the ambitious flagship Mission of Pradhan Mantri Awas Yojana (Urban).
• This amendment in the scheme will help the government meet its target of ‘Housing for All by 2022’.
• Increase in prescribed carpet area will result in increased sale of flats that are already built in the affordable housing segment.

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