What is CLSS Scheme? Complete Guide & Application Process

What is CLSS Scheme?

The Credit Linked Subsidy Scheme (CLSS) is a government initiative under the Pradhan Mantri Awas Yojana (PMAY) to make affordable housing accessible to all families across India. It provides an interest subsidy on Home Loan products, reducing the cost of borrowing for eligible applicants through Affordable Housing Loan options.

The scheme is designed for the Economically Weaker Section (EWS), Low Income Group (LIG) and Middle-Income Group (MIG) households. By lowering the effective interest rate on housing loans, CLSS allows families to purchase, construct or extend their homes without facing an excessive financial burden.

Also Read: Affordable Housing Loan: Everything You Need to Know

Key Features of the Credit Linked Subsidy Scheme

• Available for income groups like EWS, LIG, MIG-I and MIG-II categories.
• Interest subsidy ranges between 3 percent and 6.5 percent, depending on the income group.
• Maximum loan tenure eligible for subsidy is 20 years.
• Carpet area limit varies by income group, ensuring appropriate housing for different categories.
• Loan is applicable for buying, constructing or extending a residential property.
• Subsidy amount is credited upfront to the loan account, reducing the principal and EMI burden.

Who is Eligible for the CLSS Scheme?

Eligibility is determined by income levels, first-time homebuyer status and property ownership criteria. Applicants must not have previously availed of central housing assistance under other government schemes. Additionally, for EWS and LIG categories, a female family member must be listed as the co-owner of the property.

Also Read: Is Affordable Housing Loan Beneficial for Women as Primary Borrowers?

Beneficiaries must belong to statutory towns as per the 2011 Census, and the property should fall within the carpet area and loan limit guidelines.

Eligibility Criteria by Income Group

Income Group: EWS
Annual Household Income: Up to ₹3 lakhs

Maximum Carpet Area: 30 sq.m.
Subsidy Rate: 6.5%
Maximum Loan Considered for Subsidy: ₹6 lakhs

Income Group: LIG
Annual Household Income: ₹3-6 lakhs

Maximum Carpet Area: 60 sq.m.
Subsidy Rate: 6.5%
Maximum Loan Considered for Subsidy: ₹6 lakhs

Income Group: MIG I
Annual Household Income: ₹6 -12 lakhs

Maximum Carpet Area: 160 sq.m.
Subsidy Rate: 4%
Maximum Loan Considered for Subsidy: ₹9 lakhs

Income Group: MIG II
Annual Household Income: ₹12 -18 lakhs

Maximum Carpet Area: 200 sq.m.
Subsidy Rate: 3%
Maximum Loan Considered for Subsidy: ₹12 lakhs

How Does the CLSS Scheme Work?

The scheme reduces the loan burden by applying an upfront interest subsidy. The subsidy is calculated on the loan principal up to the prescribed cap for each income group. Once approved, the subsidy is credited directly to the borrower’s loan account, reducing the outstanding amount. This leads to a lower principal, which in turn reduces monthly EMIs.

For example, if a borrower from the LIG category takes a Home Loan, a subsidy of up to ₹2.67 lakhs can be availed depending on the loan amount and tenure. The remaining loan balance is charged at the normal interest rate set by the lender.

The scheme applies only to loans sanctioned for a maximum tenure of 20 years. Lending institutions such as Godrej Capital also offer Affordable Housing Loan options, ensuring wide access to beneficiaries.

Step-by-Step Guide: How to Apply for CLSS

1. Check Eligibility:

Confirm income group and property conditions. You can also use Loan Eligibility Calculator to understand your eligibility or Loan EMI Calculator.

2. Choose a Lender:

Approach a bank, housing finance company, or NBFC recognised under PMAY.Godrej Capital offers Affordable Housing Loan options at lower interest rates and longerloan tenures with complete transparency and no hidden charges.

3. Fill CLSS Application Form:

Submit details of income, property and loan request.

4. Submit Documents:

Provide identity proof, income proof, property papers, Aadhaar, PAN and other necessary documents.

5. Verification Process:

The lender verifies eligibility and forwards the claim to the nodal agency.

6. Subsidy Credit:

Once approved, the subsidy is transferred to the lender, reducing the principal balance.

7. Track Application:

Applicants can track subsidy disbursal through the lender or PMAY website.

Documents Required for CLSS Application

• Identity proof such as Aadhaar, PAN, Voter ID or Passport
• Income proof such as salary slips, IT returns or Form 16
• Property documents such as agreement, title or approved plan
• Loan sanction letter from the lender
• Address proof
• Photograph of the applicant and co-applicant

Benefits of Availing CLSS Scheme Under PMAY

Availing CLSS provides multiple benefits:

• Lower interest burden and reduced EMIs
• Increased affordability of homeownership
• Financial inclusion of low and middle-income families
• Encouragement of female property ownership in EWS and LIG groups
• Wider housing access in statutory towns

Common Myths & Misconceptions About CLSS Scheme

Myth: CLSS is available for any loan amount.
Fact: Subsidy is limited to loan caps set for each income group.

Myth: Existing homeowners can also benefit.
Fact: Only first-time homebuyers are eligible.

Myth: Subsidy applies to loans beyond 20 years.
Fact: Subsidy is applicable only for a maximum tenure of 20 years.

Myth: Only banks offer CLSS.
Fact: Housing finance companies and NBFCs are also recognised lenders.

Apply now for an Affordable Housing Loan.

FAQs

Q.1. Can existing homeowners apply for CLSS?

A. No, the scheme is strictly for first-time homebuyers.

Q.2. Is CLSS applicable for home renovation or extension?

A. Yes, it is applicable for home construction, purchase or extension, subject to eligibility.

Q.3. What happens if I sell the house before loan repayment?

A. The subsidy benefit remains, but future claims under PMAY will not be allowed.

Q.4. Can NRIs avail benefits under CLSS?

A. No, the scheme is only for Indian citizens residing in the country.

Q.5. How long does it take to get the subsidy credited?

A. Generally, it takes three to six months after verification.

Q.6. Is there any processing fee for applying for CLSS?

A. No, lenders cannot charge additional processing fees for CLSS applications.

Disclaimer:

The contents of this article are for information purposes only and not a financial advisory. The information is subject to update, revision, and amendment and may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Godrej Capital or its Affiliates to any requirements. Godrej Capital or its Affiliates shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any decisions, financial or otherwise based on the contents and information mentioned. For more information, please visit www.godrejcapital.com