The government launched the second phase of Pradhan Mantri Awas Yojana (PMAY) on 9 August 2024. PMAY 2.0 is a Credit-Linked Subsidy Scheme (CLSS). It aims to provide assistance to the economically weaker section (EWS), Low Income Group (LIG), and Middle Income Group (MIG) to purchase or construct houses.
But, under this scheme, the subsidy can be withdrawn on certain conditions, about which most of the beneficiaries are not aware.
The government has set several eligibility conditions under PMAY 2.0 under which only people who do not have a permanent home anywhere will get the benefit.
Classification based on income is as follows.
- EWS : Annual family income should not exceed 3 lakh rupees.
- LIG : Annual income should be between Rs 3 lakh to Rs 6 lakh.
- MIG : Annual income should be between 6 lakh to 9 lakh.
Withdrawal of Subsidy Interest provided under the scheme may be withdrawn in certain cases.
The main reasons include:
- If the borrower is unable to repay the loan and his account becomes NPA (Non Performing Asset).
- Even after the release of subsidy, if the construction of the house is stopped due to some reasons.
- If utilization certificate is not submitted within one year.
How does PMAY subsidy work?
Under the PMAY scheme, the interest subsidy is already added to the borrower’s loan account, thereby reducing their EMI.
EWS and LIG categories get 6.5% interest subsidy.
Effect 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If the subsidy is withdrawn, the borrower’s EMI may increase.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, they have to go back to the base interest rate, which increases the EMI.
Noted:
Beneficiaries should seek information from their bank about the circumstances under which the subsidy can be withdrawn. Apart from this, it is also important to keep all the necessary documents like utilization certificate and income certificate ready.