You might have heard about the buzz around the affordable housing scheme launched by the Govt. of India on 25th June 2015. A program aimed at ensuring housing for all in urban areas by the year 2022.
It is also known as the Credit Linked Subsidy Scheme (CLSS), which pays the interest subsidy upfront on your home loan account, reducing the cost of acquiring a new home.
The CLSS backed home loan can be taken for new home purchase, construction, extension, and improvement.
So, how does one benefit from this affordable housing scheme? Let’s find out.
Benefits Offered under Housing Subsidy
- Large Interest Subsidy for Every Borrower
The scheme is earmarked for the economically weaker section (EWS) of the society, low-income group (LIG) and middle-income groups (MIG) for purchase and construction of the new house.
For those falling under the EWS and LIG category, the home loan interest rates are subsidized by 6.5%. The maximum interest subsidy amount given is Rs 2.67 lakh during the whole tenure of the loan.
While for those falling under the MIG I category, the interest rates are subsidised by 4%. The maximum interest subsidy amount is Rs 2.35 lakh in the full tenure of the loan.
And, in the MIG II category, the interest rate subsidy offered is 3%, and the maximum interest subsidy amount is Rs 2.30 lakh.
The interest subsidy is provided only for 15 years or on the actual tenor of the loan, whichever is lower.
- Huge GST Relief
For the houses that are acquired or constructed under the CLSS, the concessional rate of GST is 8%. It will be applied after deducting one-third of the amount charged for the house towards the cost of land.
Those who are not covered under the CLSS will continue to pay the higher GST of 12%.
- Income Tax Relief
The borrower can also take the income tax benefits with total benefits amounting to Rs 3.5 lakh under various sections of the Income Tax Act.
You can claim a total tax deduction of up to Rs 1.5 lakh under Section 80C on principal repayment. Deduction of up to Rs 2 lakh is allowed on interest factor under Section 24 and an additional benefit of Rs 50,000 under Section 80EE.
- Lower EMIs
Since the interest subsidy is credited upfront to your home loan account, it reduces the interest liability, thus reducing your outstanding loan amount and the EMI amount.
And, since the interest rates of the home loans issued under CLSS are fixed, using a home loan calculator, you can calculate the EMI. This will help you decide on the tenor of the loan.
Conclusion
The CLSS or the affordable housing scheme is the flagship scheme of Govt. of India that allows urban poor and middle-income groups to own a home. This scheme also protects the larger interest of the women and minorities in the society and allows them to live with dignity.
A home loan calculator can help in the planning phase of aquiring a home loan through this scheme. By providing interest rate subsidy, GST relief, and with flexible repayment terms, it adds affordability to your home purchase and fulfils your dream of owning one.
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