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PMAY and its many Benefits for Consumers

By Finserv MARKETS - Feb 22,2019
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PMAY Subsidy

Introduction

One of the foremost things to understand about the Pradhan Mantri Awas Yojana (PMAY) is that it arose out of the growing wariness that consumers began to have about investing in the real estate sector. A reason for such a thing happening could be attributed to the widespread deception and corruption that was being carried out by promoters and developers, as a result of their powers going largely unchecked. However, the fact cannot be ignored that investments made in the real estate sector have a positive effect on the country’s economy. And, in order to boost this, the current government came up with the unique PMAY scheme with a principal focus on people regaining an interest in investing in real estate.

What is the motive behind PMAY

The PMAY aims at subtracting the arbitrary commissions pocketed by developers in light of their powers going unchecked. The cost of buying land or having a home or office space constructed was, therefore, skyrocketing for the aspiring owner. Under the Section 80IBA of the I-T Act, there is now a fixed percentage of commission that each builder can keep aside as his personal income from a single property. Before going through this process, they are not even allowed to promote their property.

Benefits of the Pradhan Mantri Awas Yojana

If you are buying a home of a slated size in any part of the country, under the PMAY, you are eligible for subsidies. These concessions are made with regard to the home loan rate of interest that you will be required to pay. The Credit Linked Subsidy Scheme under the PMAY has also resulted in people buying a bigger home. This is because loans have been made available at softer rates of interest.

PMAY Eligibility

Conducting a thorough research on the eligibility criteria is highly recommended for availing this scheme. Buyers belonging to the Middle Income Group will be eligible for the PMAY. Additionally, buyers with an annual income of up to Rs. 12 Lakh per year will have to buy a house with an area of 120 square meters to be eligible for the concession in rates of interest. People with an annual income of up to Rs 18 Lakh will have to buy a house of 150 square meters to avail the softer rate of interest.

Tax benefits for consumers and builders

There is need for an increase in the prevailing exemption of interest from the existing rupees two lakh under Section 24 (b) of the Income Tax Act, 1961. In order to encourage home owners to invest more readily in real estate, it is not enough to just reduce rates of interest on loans provided by commercial banks or NBFCs, it is also necessary to increase the interest limit that can be offered to you while taking a Bajaj Finserv Home Loan. This must also accompany a reduction in the rate of income tax as part of pmay tax benefit for home buyers’ scheme. When offered in a package, this will concentrate more money on the hands of the tax payer which he may put to investment in the real estate sector.

Read more about Government Housing Schemes

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522