The Pradhan Mantri Awas Yojna scheme of Central Government was relaunched after the Prime Minister's address to the nation on 31st Dec. 2016. Under this scheme credit linked subsidy is granted to urban households to enable them purchase or construct a residential dwelling unit for themselves. The scheme has been framed to achieve the target of 'Housing for All' by 2022. This scheme is available only for urban areas. For rurals, there are separate schemes.
The scheme is divided in three categories based on the income level of the beneficiary households: Economically Weaker Section (EWS) or Low Income Group (LIG) Middle Income Group-1 (MIG-1) Middle Income Group-2 (MIG-2)
The terms and conditions of the scheme are different for different categories of beneficiaries. I am discussing here the features of the scheme for both the MIG categories.
1. Annual Income: For MIG-1, annual income of household exceeds Rs. 6 lacs but does not exceed Rs. 12 lacs. For MIG-2, annual income of household exceeds Rs. 12 lacs but does not exceed Rs. 18 lacs.
2. Household means husband, wife and unmarried children. However, if there are adult earning child/ren, they can be treated as separate household. It means that one household/family can avail the scheme only once. However, if adult children are earning separately, whether married or unmarried, he/she can avail the scheme in his/her individual capacity. Further, the scheme can be availed only once in the name of either husband or wife or jointly. It means the husband and wife can not avail the benefit separately for two houses.
3. Purpose of the loan- For purchase of a ready built house/flat/apartment or for construction of a house or for expansion of existing house/apartment or for conversion of an existing kuchcha house into pucca house
4. The family should not own a pucca house in any part of the country in the name of any of its members. However, this condition is not applicable if loan is availed for expansion/modernization/conversion of existing house.
5. All basic civil amenities such as electricity, water, sewage, toilet etc. should be available in the house to be purchased/constructed to be able to avail interest subsidy under the scheme.
6. The layout plan of the house must necessarily be approved. Further, the construction and design of the house should be strictly in compliance with National Building Code, BIS norms for construction and the guidelines of National Disaster Management Authority.
7. Size of the house: For MIG-1, carpet area should not exceed 90 sq. meters For MIG-2, carpet area should not exceed 110 sq. meters
8. Quantum of interest subsidy available: For MIG-1, subsidy is granted @4% p.a. for a maximum loan amount of Rs. 9 lacs for a maximum tenure of 20 years. The maximum amount of subsidy is Rs. 235068. For MIG-2, subsidy is granted @3% p.a. for a maximum loan amount of Rs. 12 lacs for a maximum tenure of 20 years. the maximum amount of subsidy is Rs. 230156.
It means, even if loan is availed exceeding Rs. 9 lacs/12 lacs, the subsidy will be calculated assuming that loan of only Rs. 9 lacs/12 lacs was availed by the family. The excess loan will be at non subsidized normal interest rate. Similarly, even if loan is availed for more than 20 years, the subsidy will be computed for 20 years only.
9. Proof of income- A self declaration or affidavit is sufficient
10. Mode of subsidy credit- The subsidy is credited upfront in the loan account of the beneficiary after a few months thus reducing the principal amount of loan and consequently reducing the EMI of the loan.
11. The account must be standard at the time of credit of subsidy. If the account subsequently turns into NPA at any time thereafter, the subsidy will be recovered.
12. If the construction of house is stalled before completion at any time due to any reason, the subsidy will be recovered.
13. Aadhaar is the mandatory proof of identity for availing this interest subsidy.
14. This subsidy is available to anyone across the entire urban areas of the country irrespective of caste/religion/gender/occupation etc. subject to above conditions.
CA Mahesh Bansal
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