For many Indians, the skyrocketing real-estate prices has become a major impediment in realising their dream of homeownership. This is why the government of India launched a new affordable housing scheme, catering to different sections of society. The Pradhan Mantri Awas Yojana (PMAY) was introduced by the Ministry of Housing and Urban Poverty Alleviation in June 2015. The scheme has two components, addressing urban and rural populations.
What is the PM Awas Yojna?
The PM Awas Yojana is a Credit Linked Subsidy Scheme (CLSS), intended to facilitate the government’s mission of ”Housing for All by 2022.” Under this scheme, the beneficiaries are entitled to receive interest subsidy on home loans for the purchase, construction, expansion or improvement of a house. The scheme caters to the Economically Weaker Sections (EWS), Lower Income Group (LIG), and Middle Income Group (MIG) segments of society. The PMAY subsidy provided under the scheme varies according to which income segment beneficiary belongs to and the size of the dwelling unit.
What are the Benefits and Feature of the PMAY?
The features and benefits of the scheme are outlined below:
- Under the scheme, all beneficiaries are entitled to an interest rate subsidy of up to 6.5% on a housing loan. The maximum tenure of loan repayment for all categories of applicants is 20 years.
- The subsidy on the loan varies for different categories of borrowers and depends on the income slab of the applicant:
- Income of up to ₹6 lakhs per annum (EWS & LIG): Subsidy is 6.5% on loan amount limit of up to ₹6 lakhs.
- Income up to ₹12 lakhs per annum (MIG-I): Subsidy is 4% on loan amount limit of up to ₹9 lakhs.
- Income up to ₹18 lakhs per annum (MIG-II): Subsidy is 3% on loan amount limit of up to ₹12 lakhs.
- Any loan amount applied over the limit fixed under the scheme will be at market rates.
- Under the scheme, senior citizens and differently-abled individuals are preferred for a home on the ground floor.
- For sustainable development, eco-friendly technologies should be used for construction.
In addition to purchasing a house from the builder, the scheme is also applicable for constructing your own house and for upgrading ”Kutcha” homes to a concrete home.
What are the Other Incentives to Apply for PMAY?
Under the Pradhan Mantri Awas Yojana, the GST rates applicable to all applicable home loans has been reduced from 12% to 8%. Even under-construction properties, that come under the purview of the scheme, are eligible for 8% GST. The direct beneficiary is the loan applicant under EWS/LIG/MIG categories, who can now get homes at reasonable prices. Reduced GST also incentivises builders to promote affordable housing projects.
Under PMAY, first-time home buyers are entitled to tax deductions under Section 80EEA of the IT Act on home loan EMIs. The maximum limit is ₹1.5 lakhs of the taxable income per year.
So, applying for a home loan under PMAY is beneficial in accessing affordable home loans, In addition, the PMAY is an effort to usher in social justice.
