The second phase of Pradhan Mantri Awas Yojana (PMAY) has been launched recently. In this, eligible persons get concession on home loan through Credit Linked Subsidy Scheme (CLSS). But many people do not know that the government can withdraw the subsidy if some conditions of the scheme are violated.
When can the subsidy be withdrawn?
Broadly, there are three circumstances under which credit linked subsidy can be withdrawn.
- first position: If the borrower defaults in paying the loan installments to the bank and the loan becomes NPA. That means its recovery is not possible.
- Second situation: When credit subsidy has been given to the person concerned, but due to some reasons the construction of the house has stopped. In such a situation, the subsidy amount will have to be returned to the government.
- Third position: The government can withdraw the subsidy if the certificate of use of the house is not submitted. The lending bank is required to submit the utilization/end-use certificate to the nodal agency for completion of the construction of the house within one year from the date of disbursement of the first installment of the loan amount or within a maximum of 36 months. In the absence of this certificate, the bank has to return the subsidy to the concerned nodal agency.
Only one subsidy in the family
Under the scheme, only one subsidy is given to each member of the family. This includes husband, wife and unmarried children.
What happens when EMI is withdrawn?
When the subsidy ends, the loanee has to return to the original interest rate, leading to an increase in EMIs.
Can one avail PMAY subsidy if one already has a home loan?
You cannot avail PMAY subsidy on an existing home loan. PMAY subsidy is for those who are buying a house for the first time.
Graphics Source: VaskarAssets
