Purchasing a house is a dream come true for most middle-class Indian households. In order to make this dream a reality, the government has launched the Credit-Linked Subsidy Scheme (CLSS) under the Pradhan Mantri Awas Yojana (Urban). Created specifically for urban middle-income groups (MIG), the scheme sought to alleviate the financial strain of home loans by providing interest subsidies. Despite the CLSS for MIG closing in March 2021, it is still applicable for applicants who filed their applications prior to the cutoff and are still waiting for disbursement.
What Is CLSS and How Does It Work?
CLSS was introduced in 2017 to provide home loan subsidies as per income classes. It enabled the eligible beneficiaries to take advantage of an upfront interest subsidy, which would decrease their loan amount directly and hence lower EMIs. The scheme provided benefits not only to low-income families but also to two middle-income segments: MIG-I and MIG-II.
The interest subsidy was credited upfront to the loan account by the lending bank, after the government approved the claim via Central Nodal Agencies such as HUDCO, NHB, or SBI.
Income Categories and Benefits Under CLSS
MIG-I (Annual Income ₹600,001 to ₹1,200,000)
Borrowers who were in this segment could get a 4% interest concession on a maximum loan value of ₹9 lakh. The highest carpet area that could be covered under this segment was 160 square meters. The subsidy amount may go as high as ₹2.30 lakh, depending on the loan tenure and applicable interest rate.
MIG-II (Yearly Income ₹12,00,001 to ₹18,00,000)
MIG-II beneficiaries were eligible for a 3% interest subsidy on home loans up to ₹12 lakh, with the carpet area limit raised to 200 sq. meters. Do you know Even if the loan exceeded ₹12 lakh, then the interest subsidy was granted only on the eligible capped amount.
Who Was Eligible for CLSS?
For availing the facilities of CLSS, the applicant was required to satisfy multiple conditions. One key condition is that the household must not own a permanent (pucca) house anywhere in India.
The applicant must not have derived any central assistance under any other housing schemes either.
For MIG classes, there was a mandate of having a female co-owner for the property unless a family had no adult female member. Further, the beneficiary would have to seek a home in statutory towns or urban centers as listed in census records.
What Kind of Properties Were Included?
CLSS benefits were eligible for buying, building, or even upgrading a home. It encompassed the construction of new homes, purchase from the secondary market, or expansion of existing homes by constructing rooms, kitchen or bathrooms.
But the subsidy was only for those homes that were within the carpet area limits as specified. Even if a bigger property was bought, the subsidy value would be capped to the loan maximum limit specified under MIG-I or MIG-II.
How to Apply for the CLSS?
The application process included visiting any bank or housing finance company that has registered under PMAY-Urban. The applicants had to submit a CLSS-specific application form and documents as listed below:
- Identity proof (Aadhaar, PAN)
- Income proof (salary slips, ITR)
- Address proof
- Property documents
- Recent passport-size photographs
- Bank account details
After the loan was approved and documents were checked, the lender would then forward the request to the nodal agency for the release of the subsidy. The government would disburse the amount of subsidy directly into the borrower’s loan account.
Current Status of CLSS for Middle-Income Group in 2025
You need to know As of 2025, the Credit Linked Subsidy Scheme (CLSS) for the Middle-Income Group (MIG) stands officially discontinued. The scheme was concluded on March 31, 2021, and there have been no updates or extensions announced since then. There have been no fresh applications received since then. Nevertheless, already approved subsidy claims prior to the cutoff date were still being processed in 2022, 2023, and even the early part of 2024.
According to government statistics, more than 25 lakh families have been benefited by the CLSS in all categories, out of which almost 6 lakh are from MIG. The overall subsidy given under the whole scheme has exceeded ₹58,000 crore.
Why CLSS Mattered to the Middle Class
Credit-Linked Subsidy Scheme benefited middle-class families to the extent of heavy reduction in their EMI burden. A subsidy of 3-4% on home loans translated into savings of as much as ₹2.30 lakh, which was a significant advantage for new homebuyers. Thanks to this assistance, families were able to buy or construct houses with improved facilities and locations.
In addition, the scheme facilitated women’s property holding by insisting on a woman co-owner in the majority of instances—a significant movement towards financial inclusion.
Final Thoughts
Though the CLSS for MIG is no longer active, its impact on affordable housing remains substantial. For those who applied before March 2021 and are still awaiting subsidy, following up with your lending institution is essential. For new borrowers today, other components of PMAY and private-sector schemes may offer alternatives.
Affordable housing continues to remain a top priority for the Indian government, and innovative models of subsidy could be introduced in the future. Monitoring such schemes enables middle-class families to make the best possible financial choices related to home ownership.