7th Pay Commission House Building Advance Latest News: Defence Service Personnel from the Indian Army, Navy and Air Force are now eligible for House Building Advance (HBA) as per recommendations of the 7th Pay Commission.
In a circular dated 19th June 2023, the Department of Military Affairs (DMA) said the President has decided that the Defence Personnel may be granted HBA under the House Building Advance Rules promulgated by the Ministry of Housing and Urban Affairs.
According to the circular signed by Laxmi Balasubramanian, Under Secretary to the Government of India, the President decided to liberalise further the existing scheme of HBA after considering the recommendations of the 7th Pay Commission and other relevant factors.
HBA Limit for Defence Personnel
According to the circular, the following are the limits on HBA to be provided to Defence Personnel:
Purchase/construction of new house flat: 34 months’ basic pay subject to a maximum of Rs 7 lakh or cost of the house/ flat, or the amount according to repaying capacity, whichever is the least for construction/ purchase of new house/ flat.
Expansion of existing house: The amount of HBA will be limited to 34 months’ basic pay subject to a maximum of Rs 6 lakh or the cost of the expansion, or the amount according to repaying capacity’ whichever is the least.
Limit on the cost of house: The cost of the house to be built/purchased (excluding the cost of plot) should not exceed 139 times of the basic pay of the employee subject to a maximum of Rs 60 lakh.
The DMA said that in case the Head of the Department (HOD) is satisfied with the merits of the case, the cost ceiling may be relaxed up to a maximum of 25%. The HOD here would be the Adjutant General/Chief of Logistics/Air officer-in-Charge Administration, as the case may be.
Calculation of Repayment capacity
For the purpose of calculating the admissible loan amount, the repayment capacity of the central government employee will be calculated as below, according to the circular.
- ln case of employee retiring after 20 years: 40% of basic pay
- ln cases of employees retiring after 10 years but not later than 20 years: Up to 40% of basic pay, 65% of DCR Gratuity may also be adjusted.
- In cases of employees retiring within 10 years: Up to 50% of basic pay, DCR gratuity up to 75% can be adjusted.
Advance Disbursement: Terms and conditions
The advance for the purchase of a ready-built house can be paid in one lump sum as soon as the applicant executes an agreement in the prescribed form. “The employee should ensure that the house is purchased and mortgaged to the
Government within 3 months of drawal of the advances,” DMA said.
Advance for the purchase/construction of a new flat may be paid either in one lump sum or in convenient instalments at the discretion of the Head of Department. “The employee should execute the agreement in the prescribed form before the advance/ first instalment of advance is paid to him/her. The amount drawn by the employee should be utilized for the purchase/construction of the flat within one month,” the circular said.
Avance for construction/expansion of living accommodation, etc. shall be payable in two instalments of 50% each. “The first instalment will be paid after the plot and proposed house/existing house is mortgaged and the balance on the construction-reaching plinth level,” DMA said.
Advance for expansion to be carried out on the upper storey of the house will be disbursed in two instalments, the first instalment on executing the mortgage deed and the second instalment on the construction reaching roof-level.
In case of advance for the purchase of a plot and construction of the house, the advance will be disbursed as below:
- Single-Storeyed House: After the agreement in the prescribed form is executed on production of the surety bond, 40% of the advance or actual cost will be disbursed for the purchase of the plot. The balance amount will be disbursed in two equal instalments, first after the mortgage is executed and second upon the construction reaching the plinth level.
- Double Storeyed House: 30% of advance for the cost of the plot will be disbursed on executing the agreement. The balance amount will be disbursed in two equal instalments, the first on executing the mortgage deed and the second on construction reaching the plinth level.
Interest Rate
According to the circular, the interest on Housing Building Advance for the financial year 2017-18 onwards shall be 8.50%. This will be reviewed every three years to be notified in consultation with the Ministry of Finance.