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How Interest Subsidy is calculated under Credit Linked Subsidy Scheme in PMAY?

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Affordable housing is one of the major focus areas of the present Government. Pradhan Mantri Awas Yojana (PMAY) was launched in 2015 to promote affordable housing.

Under PMAY, the Government launched Credit Linked Subsidy scheme (CLSS) to provide relief to such buyers who take loan to purchase or construct a house .

Under the scheme, the Government, through its nodal agencies HUDCO and National Housing Bank, will credit the interest subsidy directly to the loan account of beneficiaries.

You need to meet eligibility criteria before you get subsidy benefit. The interest subsidy will depend on your income segment.

Let’s look at the fine points of the scheme.

What are the various Income Classifications?

Economically Weaker Section (EWS): Household income up to Rs 3 lacs per annum.

Low Income Group (LIG): Household income above Rs 3 lacs and up to Rs 6 lacs per annum

Middle Income Group-I (MIG-I): Household income above Rs 6 lacs and up to Rs 12 lacs per annum

Middle Income Group-II (MIG-II): Household income above Rs 12 lacs and up to Rs 18 lacs per annum

Credit linked subsidy scheme calculations CLSS PMAY Pradhan Mantri Awas Yojana 1

What constitutes a Household?

As I understand, the household comprises self, spouse and unmarried children.

The adult earning member (irrespective of marital status) can be considered a separate household.

Eligibility criteria

  1. The applicant must not own a pucca house anywhere in India.
  2. In case of a married couple, either of the spouse or both together in joint ownership will be eligible for a single house. Therefore, if you are married, then you can’t get subsidy for two houses.
  3. The applicant must meet the income eligibility criterion too for the household (as mentioned above).
  4. The applicant (family) must not have availed of central assistance under any housing scheme from Government of India.
  5. The house should have basic civic infrastructure such as water, sanitation, sewerage, road, electricity.

How is subsidy calculated?

This is slightly complicated. The eligible loan amount is not reduced from the actual loan amount.

Before we move on to exact calculations, here are a few points you must know.

  1. Your loan amount can be much larger, but the eligible loan amount for calculation of subsidy shall be Rs 6 lacs (EWS or LIG), Rs 9 lacs (for MIG-I) and Rs 12 lacs (MIG-II).
  2. If the tenure of the loan is greater than 20 years, the subsidy is calculated using tenure of 20 years. Tenure for subsidy calculation shall be Rs lower of (Actual Tenure, 20 years).

Illustration

Suppose you fall in MIG-II bracket with income of Rs 15 lacs per annum. You take a home loan of Rs 35 lacs at rate of 10% p.a. for 25 years.  Your home loan EMI will be Rs 33,775.

  1. Since you fall in MIG-II, loan amount eligible for subsidy will be Rs 12 lacs. This will vary depending upon income segment you fall in. It does not matter if your actual loan amount is much higher at Rs 35 lacs.
  2. Tenure will be 20 years i.e. lower of (actual tenure, 20 years)
  3. Interest rate used shall be 3% p.a. (interest subsidy for MIG-II). Again, will vary depending upon income segment.
  4. Calculate EMI using the aforementioned parameters. EMI can be calculated using PMT formula in MS Excel. EMI comes out to Rs 6,655.
  5. Calculate interest paid (effectively interest saving) in each month.
  6. Discount the interest paid every month at 9% p.a.
  7. Add the discounted amount to arrive at total subsidy amount. This amount will be credited upfront to your loan account.

Credit linked subsidy scheme calculations CLSS PMAY Pradhan Mantri Awas Yojana 2

How did you benefit?

As you can see, the interest subsidy to be credited to loan account is Rs 2.3 lacs, which is a significant amount.

In absence of such subsidy, the loan EMI would have been Rs 33,775 per month.

After adjusting the loan amount for subsidy, the EMI will be Rs 31,554 per month.

That is a neat saving of Rs 2,221 per month. Over the loan tenure, your total savings due to subsidy will be Rs 5.33 lacs (Rs 2,221 X 240)

Do note the saving will change if you move across income groups.

If you were in MIG-I group (income between Rs 6 lacs and Rs 12 lacs), the loan amount eligible for subsidy would have been only Rs 9 lacs but the interest subsidy would have been higher at 4%. The subsidy will be Rs 2.35 lacs.

The EMI saving in that case would have been Rs 2.268 per month. Total saving of Rs 5.44 lacs over the loan tenure.

Points to Note

  1. The interest subsidy is available only to first time home buyers.
  2. If you already own a house in India, you will not get any benefit under Credit Linked Subsidy Scheme (CLSS).
  3. If you are a dual income household, do consider income of your spouse too check your eligibility.
  4. There is no upper cap on the loan amount. Just that the loan amount eligible for subsidy is capped for various income segments.
  5. Interest subsidy will be credited upfront to the loan account of the borrower, effectively reducing the home loan amount and the EMI.
  6. CLSS for MIG is initially implemented for 1 year with effect from January 1, 2017. It may be extended in the future. However, there is no clarity as yet.
  7. There is mention of preference (under MIG segment) to women (with greater preference to widows and single working women), persons belonging to SC, ST and OBC categories, disabled and trans-genders. In my opinion, this means not all loans may get approved under the scheme. This may depend on availability of budget for the scheme.

How to claim subsidy under Credit Linked Subsidy Scheme?

You need to apply for Housing loan under CLSS at any bank branch.

As I understand, you need to submit declaration that you do not own a pucca house in India. You will also be required to submit income proof. A self-declaration will also do.

Useful Resources

  1. Subsidy Calculator for EWS/LIG segment
  2. Subsidy Calculator for MIG-I segment
  3. Subsidy Calculator for MIG-II segment
  4. Pradhan Mantri Awas Yojana website

Disclaimer

I have relied on information available in public domain. I have not talked to or interacted with bank officials. Operational reality may be quite different. You are advised to contact your bank branch to understand such operational procedures.

89 thoughts on “How Interest Subsidy is calculated under Credit Linked Subsidy Scheme in PMAY?”

  1. hello sir great explaination … just wanted to know that…..firstly subsidy of 2.3 lakhs will be credited to loan account which will decrease the EMI( difference of 2221 for 240 months) which makes it 5.33 lakh of savings on EMI.
    so the total saving would be 2.3+5.33 = 7.63….please tell me if i am wrong

    1. Deepesh Raghaw

      Hi Harshit,
      That will be double counting of benefits. Reduction in EMI is due to reduction in principal.

  2. Sir,
    I have recently purchased the house in Navi Mumbai. The home loan has been taken from SBI. It’s my first house. Can I avail this subsidy? Can I link my existing home loan with CLSS scheme?

    1. Deepesh Raghaw

      About the operations part, please check with the bank.
      I am not sure if the application has to be provided at the time of loan application or can be applied later.

  3. Sir,

    I want to purchase a resale flat in a registered society having area approx. 760 sqfeet(70.8 sqm) . My annual income is less than 6 lacs(about 45000 per month). I am not married. We have house and a plot on name of my mother and father in my home town. My elder brother has also its own house, but he is married.
    I want to know shall I will be eligible for CLSS. If yes than how much subsidy will I get in my loan account. Some body has told me if my mother or father owned a house than i am not eligible for CLSS subsidy. Is it correct sir. Please help me on this.

  4. Hi Deepak,

    Thanks for a great explanation.
    do you have an insight on a scenario “where an unmarried earning adult buys a first time house on a joint registry with parents(mother or father) but loan amount is paid by him. Will He be eligible for CLSS and who would be family members in this case”?

    1. Deepesh Raghaw

      Hi Aniket,
      I have not researched this topic beyond a point.
      In my opinion, you wouldn’t be able to get the benefit if you share the ownership with your parents (who already own the house).

  5. Dear Sir
    kindly explain how to arrive the 6.5 % Discount rate of interest on PMAY Scheme ,

    kindly clarify on the below point

    Discount the interest paid every month at 9% p.a.

  6. Sir,
    Thanks for making us understand how 2.3 lac accrue as subsidy in MIG II in PMAY URBAN home loan scheme where subsidy cap is 1200000 whose household income is more than 18 lacs per annum.

    Thanking you,

  7. Rushabh Mehta

    I have applied for Home loan,
    My HH Income is more than 9 Lacs than is it mandatory to Register my property with my spouse jointly to avail the benefit of this scheme…

    How much amount benefit i will receive if i avail a loan through this scheme.

  8. valmik sonawane

    i am married and my brother is unmarried we are jointly buy 2 bhk flat boths income becomes above 4 lakh and this is our first property can we are eligible for pradhan mantri awas yojna subsidy of 2.35 lakh.

  9. Dear Sir,

    how Income calculation will take place ….?weather it will be done on the basis of net salary or it will be calculate on CTC basis.

    Regards
    Rohit Bhatt
    9828071631

  10. Sir,

    ‘There is mention of preference (under MIG segment) to women (with greater preference to widows and single working women), persons belonging to SC, ST and OBC categories, disabled and trans-genders’.

    This means that majority of applicants will be rejected.on the above grounds.

    I had applied for the scheme . The property is jointly registered with my wife.

    The Bank rejected the same citing the above provisions.

  11. Yellapu.Paidiraju

    Hi, Deepesh sir my father &my wife have received D. Farm pattass for side by side lands from Andhra CM on26.07.2017. (extent of each plot61.5sq yards only) so they are eligible or not under CLSS scheme to construct the houses.Our annual income is below1.5lacs only. Please suggest me sir.

  12. I am appling for a home loan & this is my 1st home. Loan tenure is 25 years. Can I eligible for clss sheme. as the loan tenure is 25 years.

  13. 1) I(male)had purchased a plot(piece of land) in the year 2016 with the help of bank loan. And then sold the plot by foreclosing the bank loan and purchased another from the money received from the sale of first.
    2) The purchased plot was registered only in my name(male).
    Now tell me shall i get CLSS benefit under MIG-I slab considering the above two points.

  14. I have taken loan on August 2016. I have filled return of 638000 for joint income of me and my wife. I was earlier aware about net income is counted for CLSS. I am filling my wife’s return on approximate basis. She has tution income. We had baby in that accounting year. But, by mistake I had filled more amount return. Shall I eligible if I file revised return for my wife.

  15. Hi,
    I have a question and its driving me crazy, My base salary is 30K but including incentives my salary varies to 55K to 70K till last month October 2017. But from this month ( Nov 2017 )my total salary ( base + incentives) will most probably will come down to about 35K ( Off season at work ) and this situation will continue for the next 3-4 months ( After that it will change back to my old salary scale ) . I am gathering all the necessary documents and I am planning to submit it next week – that is the 1st week of December 2017 to bank under MIG1 scheme. So my question is – In this situation , under which scheme should I submit the application? Can I apply for MIG1 itself?

  16. I have taken a Home loan From LIC. Just few days back my first installment has deducted. i just want to know how much time take to get PMAY benefit.

  17. Me and my wife jointly earns Rs. 1900000/- (10 Lacs and 9 Lacs). She is a Co Owner but I applied for Loan on the basis of my Income which was enough for the Loan Amount Limit. In the Declaration to be submitted for PMAY there is a note below which says In Case of CLSS for MIG Scheme, adult Earning Member (irrespective of Marital Status) may be treated as a seperate household provided he/she do not own a pucca house.

    Can you help me interprit the note. Basically we do not own a pucca house and our Gross CTC became 19 Lacs this Year, whether we would be eligible for PMAY because the year is not ended yet and my wife may or may not continue her job from next month so the Income would again become less that Rs. 18 Lacs.

    Is it based on the Gross Income shown for the AY 2017-18 in ITR??? which is less that 18 Lacs.

  18. Vaibhav Vyavahare

    Dear Sir,
    Thanks a lot for such a beautiful n easy explanation.
    I took loan from bank for construction of first floor (ground floor was already there which was built by my father in past and that time he has not availed any loan for the construction of that home and he has passed away).
    Now the said property is in joint name of me n my mother(pensioner).I took home loan in joint name of us from bank.I falls under MIG1 SCHEME.
    So my question is that can I get the benefit of PMAY as it is for construction of first floor? Or they will say that I m already having own Pucca house.Please help me in this regard as bank is also not having proper clarification.

    1. Hi Vaibhav,
      As I understand, since you already own a house, the relief should not be available.
      But I am not sure.

  19. if pradhan mantri awas yojna sabsidy once credit in our loan ac after how many tenure we close our home loan or pre payment in our bank .becoz my bank said i am not eligible for 15 years for loan close or pre payment.is that true or what.

    1. Hi Hiren,
      I do not think there is any such rule. In my opinion, you can close the loan account whenever you want.
      Ask the bank official to show relevant documents.

  20. Resp sir
    From which time this scheme is applicable..?I read it on government site that it is applicable only after Jan 2017 for MIG group ? My loan is disbursed in June 2016.

  21. I have availed home loan for 15 years and extended home loan tenure to 20 years after 2 months. If i apply for PMAY, am i eligible for 20 year interest subsidy(2.35 lakhs) or am i only eligible for 15 year interest subsidy ?

    1. Hi Jagan,
      Can’t say with certainty.
      Guess the govt. will provide subsidy based on details shared by the bank.
      Therefore, Please check with your bank.

  22. Sir ,

    Kinldy suggest me if i avail subsidy using PMAY. in future can i do partial payment to close my loan early. since once i checked this with my currently running loan with icici , they are saying you have to run the loan acccount for 20 years only if you avail the subsidy. it means i am bound to pay intreset for next 20 years even when in future if get money from somewhere i cannot close my loan early.

  23. Respected Sir ,

    I apply CLSS in Feb 2017 . In jun 2017 I got query from NHB about my DHFl home loan Deatil i resebd it in Jun 2017 . But Till the date i have not recived Subsidy . My DHFl loan sanction in jan 2016 And i transfer it in HDFC ltd in Dec 2017 . Plse help about my Query

  24. Respected Sir ,

    Just tell in Balace transfer case subsidy is applicable ? if Balance transfer is happen after 2016 Dec .

    My First Home loan is from DHFL From Jan 2016 (Disbursment) And i Transfer it in HDFC ltd in 2017 Jan

    1. Hi Sanjivan,
      In my opinion, you are eligible.
      Assume you do not fall in MIG-1 or II. The reason is that for MIG, the scheme started in 2017.
      However, please do appreciate the operational issues involved.
      Your application went through DHFL. Even if the subsidy were to come to DHFL loan account, it would be sent back since your loan account is closed there.
      That’s why i asked you to check with HDFC because they can tell if they forwarded your case to NHB.

      1. Respected sir,
        I am not application from DHFL . After Transfer Loan in HDFC then i apply to CLSS subsidy. MY case is also forwerd to NHB With Sanction Details of DHFL. I am not applying this application From DHFL.

        1. Sanjivan,
          I am sure how such a structure will work.
          But again, since HDFC let you apply, this may work.
          Please contact HDFC or DHFL and seek clarity in this matter.
          Do note not everyone gets the subsidy.

  25. Dear Sir,
    I’ve taken home loan for a tenure of 15 years and applied for PMAY. I fall under MIG-1,
    How much subsidy will I get?
    Is the subsidy amount varies for tenure of 15 years and tenure of 20 years?
    What happens if I close my loan in 10 years?
    Thanks.

    1. Hi Ravi,
      There are various online calculators available that can try to work out the subsidy amount.
      You can close the account in 10 years.

  26. Hello Sir,

    Nice Explanation.. My loan first disbursement was on 30 Dec 2017 under PMAY. I asked banker what is the current status of my PMAY. They said, they forwarded my application on 10 Mar 2018 and it will take atleast 8/9 months to credit my subsidy amount into my account. But when I asked any Assessment ID so that I can track, they no there is assessment ID and also you will not find anything in PMAY side as this is not linked. I have doubt as it is taking almost 1 yr to credit subsidy amount? Please advise what I need to do to track my application.

    Thanks,
    Prasanna

    1. Deepesh Raghaw

      Hi Prasanna,
      To be honest, I am a bit challenged on the operational front. Therefore, can’t help you.
      However, in such cases, it is always better to seek response over e-mail.
      That puts banks in the corner and they have to think before responding.
      Escalate to CEO if you do not get a proper response.

  27. haresh sorathiya

    dear sir

    i have purchase flat rs. 19,35,000/- my income 3,86,000/- pa ( loan tenor 30 years with AXIS bank)

    my agreement jointly with my wife.

    please tell me, i’m eligible for subsidy ?????

  28. haresh sorathiya

    dear sir

    i have purchase flat rs. 19,35,000/- my income 3,86,000/- pa ( loan tenor 30 years with AXIS bank)

    my agreement jointly with my wife.

    please tell me, i’m eligible for subsidy ?????

    Reply

  29. Dear Sir,

    I want to check the status of CCLS , 5 month before I submitted the docs to Bank.
    how I can check, and Bank has not given me any acknowledge.

    1. Deepesh Raghaw

      Dear Abdul,
      I am not very sure. The entire process is a bit opaque to me.
      I mean I don’t have how to check the status.
      Please check with the bank.

  30. Hai Sir
    My name is M. Ravindra and iam taken loan applied PMAY CLSS Scheme pmay loan sactioned 2,50,000 rs how to I receive EMI reduce or amount credit in my account , please reply sir.

  31. Hi
    If i avail subsidy and after some time I prepay my home loan. Will there be any issue ? Since tenure is also one of the factor while calculating subsidy..

  32. Dear Sir,

    I had been sectioned loan amount of Rs. 14,40,000 on 01.01.2016 at that time my annual income was 520,000. As per CLSS-LIG scheme I am eligible for LIG scheme. but today (10.05.2018) applied for CLSS-LIG scheme bank is denying due to increase in income (From 5.20lakh to 6.15lakh).

    I just want to know which year income will be calculated to check eligibility of CLSS scheme category. at the time of home loan sectioned or at the time of we applied for CLSS.

  33. Hi
    If i avail subsidy and after some time I prepay my home loan. Will there be any issue ? Since tenure is also one of the factor while calculating subsidy..

    Reply

      1. Dear Rajesh,

        I have a similar question. If I make upfront Pre payment towards my Principal amount, (before receiving CLSS benefit), my Loan Tenure will be reduced. Hence, my specific question is, will I receive the subsidy based on the current outstanding loan amount and tenure, or based on the loan amount and tenure at the time of disbursement.

  34. It means people should opt for maximum tenure in order to get maximum subsidy in respective category. Once you get your subsidy, you may adjust your tenure with bank..
    It’s been more than six month since I applied for subsidy but still no news at all..

  35. Hi,
    Nice article. I have one query.
    Suppose I have taken 12 Lacs Home loan for 20 Years tenure, and I got benefit under PMAY. Now my Outstanding amount is 9.7 Lacs(Considering 2.3L benefit from PMAY)
    I would like to preclose my loan after 6 Years.
    After 6 Years My standing amount is based on 12 Lacs or 9.7 Lacs?

  36. Sir. ..I have received the subsidy amount 2.6 lakh. how is will calculated in my loan account. current my emi 9000.is it reduce to 7000.my loan tenure is 300 months.

  37. Need help on this:
    If I am buying a house in the joint name with my sister who is also earning member. From the definition, I understand that she does not form part of my family. Is it possible for both of us to avail the scheme benefit separately on the same house property depending on our individual incomes. This property will be the first property for both of us.

  38. Hi,
    Can you please explain how for the first month, PV 2978 is calculate from interset saving 3000 ? I tried PV function is excel. it is not giving me 2978. Sum of PV is the total subsidy amount correct ? Thanks

  39. Depesh sir,
    My annual income is Rs. 500000/- I take home loan of RS. 2000000/- for 22 yrs. Then I am applicable for pm awas yojna subsidy or not.

  40. Hi, I have received PMAY CLSS subsidy of 2.35 L. It got deducted from my Home Loan outstanding amount. My home loan account belong to Bank of Baroda. My branch denied to reduce monthly EMI as part of PMAY subsidy and ask continue to pay EMI as earlier. And if I want to reduce monthly EMI on basis on PMAY subsidy then I need to pay extra charges around 5k. Is it correct/legitimate way to reduce EMI under PMAY subsidy benefits?

  41. Can you pl share the Excel used.? I am unable to understand how is the interest savings is calculated. Also what will be the case if the loan tenure is less than 20, suppose 10.?

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