The government has launched PMAY 2.0 on 9 August 2024, after the successful implementation of the Pradhan Mantri Awas Yojana (PMAY). It is a credit-linked subsidy scheme (CLSS), which provides assistance to individuals to buy or build a house.
The government recently launched PMAY 2.0 on August 9, 2024, following the successful implementation of the original Pradhan Mantri Awas Yojana (PMAY). This updated initiative is a credit-linked subsidy scheme (CLSS) designed to assist individuals in purchasing or constructing their homes. However, many beneficiaries remain unaware that the government can withdraw the interest subsidy under specific circumstances. To navigate this scheme effectively, it’s crucial to understand its rules and conditions.
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PM Awas Yojana: Know when your home loan subsidy can be withdrawn
The government has launched PMAY 2.0 on 9 August 2024, after the successful implementation of the Pradhan Mantri Awas Yojana (PMAY). It is a credit-linked subsidy scheme (CLSS), which provides assistance to individuals to buy or build a house. However, many people do not know that under certain circumstances the government can withdraw the interest subsidy given under the PMAY scheme. First, let us understand the rules of the scheme.
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PMAY 2.0 scheme rules:
Under PMAY 2.0, the government will provide benefits to the people of the economically weaker section (EWS), low income group (LIG), and middle income group (MIG). According to this scheme, assistance will be given to individuals who do not have a pucca house anywhere in the country. Some eligibility has been prescribed for this:
EWS: The annual income of the family should not exceed Rs 3 lakh.
LIG: Annual income should be between Rs 3 lakh to Rs 6 lakh.
MIG: Annual income should be between Rs 6 lakh and Rs 9 lakh.
Reasons for withdrawal of subsidy:
If the borrower defaults on loan repayment and his account becomes an NPA.
If the subsidy has already been released but the construction of the house is stalled for some reason.
If the utilisation/end-use certificate is not submitted within a year.
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How does PMAY subsidy work?
The interest subsidy under PMAY is initially added to the borrower’s loan account, reducing their EMI. Under the scheme, economically weaker sections (EWS) and low-income groups (LIG) get an interest subsidy of 6.5%.
Impact on EMI:
If the subsidy is withdrawn, the borrower’s EMI may increase. According to Anuj Sharma, COO, IMGC, PMAY subsidy reduces the borrower’s effective interest rate. When the subsidy ends, the borrower has to revert to the original interest rate, which leads to an increase in the EMI.
Points to keep in mind:
Borrowers should check with their bank to know under what circumstances the subsidy can be withdrawn. It is also important to keep all the required documents, such as utilisation certificate and income certificate, ready.
