PMAY-U 2.0 State Reforms: Nominal Stamp Duty on Small Homes and What Bengaluru Buyers Should Ask
The PMAY-U 2.0 Scheme Guidelines required States to provide stamp duty and registration below 1 per cent on PMAY-U 2.0 houses up to 60 sqm by 31 December 2024, and further reforms by 30 June 2025. What they cover and what Bengaluru buyers should check before registration.
A first-time buyer in Bengaluru, looking at a compact flat under the Pradhan Mantri Awas Yojana (Urban) 2.0, usually asks two questions: am I eligible, and how much subsidy will I get? There is a third question worth asking at the registration counter. The scheme's own guidelines required every participating State to cut stamp duty and registration charges on small PMAY-U 2.0 homes to a nominal level, below 1 per cent, as a first-phase reform. Whether and how that has reached your sale deed is something to check, not assume.
The short answer. The PMAY-U 2.0 Scheme Guidelines of September 2024 say that after signing the memorandum of agreement, a State or Union Territory must carry out a first phase of urban reforms by 31 December 2024 and other major reforms by 30 June 2025 to avail the scheme's benefits. The first phase includes nominal, less than 1 per cent, stamp duty and registration charges for houses up to 60 sqm registered under PMAY-U 2.0. The second includes single-window approval of building plans within 60 days and a mandatory 5 per cent EWS/LIG reservation in larger projects. The trade-off: these reforms can lower your costs and widen supply, but the guidelines set obligations for States, so the benefit you actually get depends on what your State has notified.
What did PMAY-U 2.0 ask States to change?
Two sets of reforms on fixed dates. Paragraph 14.2 of the PMAY-U 2.0 Scheme Guidelines says that after signing the memorandum of agreement, the State or UT will have to mandatorily carry out the first phase of urban reforms by 31 December 2024 and other major reforms by 30 June 2025 for availing the benefits under the scheme.
Paragraph 14.1 adds that States and UTs will mandatorily formulate an Affordable Housing Policy by March 2025, under which reforms and incentives should be provided to public and private agencies for building affordable housing. The guidelines explain the reasoning: the public and private sectors play a vital role in addressing the affordable housing shortage, and an enabling ecosystem is needed to augment the stock.
The scheme itself is large. The guidelines say PMAY-U 2.0 has been launched to provide assistance to 1 crore eligible urban families, with the needs of 1 crore urban poor and middle-class families to be addressed over the next five years.
Which reforms were due by December 2024?
Two, and both affect cost. The first is nominal, less than 1 per cent, stamp duty and registration charges for houses up to 60 sqm registered under PMAY-U 2.0. The second is 50 per cent additional FAR with TDR facility, free of cost, with the built-up area used for EWS and LIG housing not counted in the overall FAR of the project.
For a buyer, the first is the one to act on. If you are registering a home of up to 60 sqm under PMAY-U 2.0, ask before registration whether a reduced stamp duty and registration charge applies to it, and what document the sub-registrar needs to apply it. The guidelines set the obligation on the State; the rate you pay is fixed by the State's own notification.
| Reform in the guidelines | Deadline | Why it matters to a buyer |
|---|---|---|
| Stamp duty and registration below 1 per cent for PMAY-U 2.0 houses up to 60 sqm | 31 December 2024 | Lower registration cost on small homes |
| 50 per cent additional FAR with free TDR for EWS/LIG built-up area | 31 December 2024 | More scope for affordable supply |
| Single-window building plan and layout approval within 60 days | 30 June 2025 | Fewer approval delays in affordable projects |
| 5 per cent of built-up area reserved for EWS/LIG in larger projects | 30 June 2025 | Affordable units inside bigger developments |
| Exemption of statutory and land use change charges | 30 June 2025 | Lower project costs that can feed into price |
Which reforms were due by June 2025?
A longer list aimed at supply. The guidelines list reservation of land or area for affordable housing in relevant schemes, policies or building bye-laws; inclusion of Affordable Housing Zones in master plans and town planning schemes; and single-window, time-bound approval of building plans and layouts with minimal compliances within 60 days, through a green channel approach.
They also list exemption of statutory charges such as development charges, scrutiny charges, layout deposit and related fees; exemption of charges for land conversion and land use changes; and a mandatory reservation of 5 per cent of built-up area for EWS and LIG housing in all housing projects beyond 10,000 sqm of built-up area or 5,000 sqm of plot area.
The remaining items are adoption of the Model Tenancy Act drafted by the Ministry, through fresh State legislation or amendment of existing tenancy law; provision of land rights or patta to the landless for affordable housing; land for affordable housing in partnership at affordable rates; creation of land banks for Affordable Housing in Partnership; and streamlining documentation for acquiring land ownership.
What is the Centre offering in return?
Two benefits for EWS and LIG houses. Paragraph 14.3 says the Central Government will provide a Technology Innovation Grant for adopting innovative technology in house construction. It also says that, to help beneficiaries in the informal sector, a home loan product will be developed with the Department of Financial Services and banks and housing finance companies, supported by a Credit Risk Guarantee Fund.
Paragraph 14.4 says the Ministry will work with the Ministry of Finance to explore infrastructure status for lending to PMAY-U 2.0 projects and houses, GST treatment for affordable rental housing projects at par with affordable housing, and other possible tax incentives. Those are items to explore, not commitments with dates.
Who counts as eligible, and what counts as affordable?
The definitions decide whether any of this applies to you. The guidelines define an affordable house as one with a carpet area of up to 60 sqm in metros and 90 sqm in non-metros, with a house value of up to Rs 45 lakh. A beneficiary family comprises husband, wife, and unmarried sons and daughters, and EWS, LIG and MIG families living in urban areas should not own a pucca, all-weather house in the name of any family member anywhere in India.
Note the size difference. The stamp duty reform in the December 2024 list refers to houses up to 60 sqm registered under PMAY-U 2.0, which is narrower than the general affordable house definition. A flat between 60 and 90 sqm may be affordable under the scheme's definition in a non-metro, but would not be covered by that particular stamp duty reform as written.
PropNewz explained the scheme's supply-side vertical in our guide to the Affordable Housing in Partnership vertical and housing vouchers, and the rules on resale and lock-in in our explainer on PMAY-U 2.0 resale and balance transfer.
How do the reforms sit alongside the interest subsidy?
They are separate benefits that can stack for the right home. The guidelines say the Interest Subsidy Scheme applies to home loans sanctioned and disbursed on or after 1 September 2024 to eligible EWS, LIG and MIG beneficiaries, with annual household incomes of up to Rs 3 lakh, Rs 6 lakh and Rs 9 lakh respectively, for purchase, re-purchase or construction of a house.
Households with income up to Rs 9 lakh, a loan of up to Rs 25 lakh and a property value of up to Rs 35 lakh are eligible for a subsidy of 4 per cent on the first Rs 8 lakh of the loan, for a tenure of up to 12 years, with a maximum actual release of Rs 1.80 lakh. The carpet area limit for this component is 120 sqm, and the subsidy is released in five yearly instalments.
Two conditions matter for planning. Paragraph 4.10 sets a mandatory lock-in of five years from the disbursal of the first home loan instalment under the interest subsidy vertical, during which the beneficiary shall not sell or transfer the house. And a small home that qualifies for both the subsidy and the State's reduced stamp duty has to meet both sets of size and value limits, which differ.
What should a Bengaluru buyer check before registration?
Use the guidelines as a list of questions for your State's officials and your developer. Work through this checklist.
- Confirm you meet the beneficiary definition, including the no-pucca-house condition for every family member.
- Check the carpet area of the unit against the 60 sqm limit used in the stamp duty reform.
- Ask the developer whether the unit is being sold and registered under PMAY-U 2.0.
- Ask the sub-registrar's office whether a reduced stamp duty and registration charge applies, and under which notification.
- Get the applicable rate in writing before the registration appointment.
- For a new project, ask whether it includes EWS/LIG units under any State reservation rule.
- Keep the guidelines' reference, paragraph 14.2, in your file in case the question comes up at registration.
Frequently asked questions
Does PMAY-U 2.0 reduce stamp duty on small homes?
The PMAY-U 2.0 Scheme Guidelines of September 2024 required States and UTs, as a first-phase reform by 31 December 2024, to provide nominal stamp duty and registration charges, below 1 per cent, for houses up to 60 sqm registered under the scheme. The actual rate depends on the State's own notification.
What is an affordable house under PMAY-U 2.0?
The guidelines define an affordable house as one with a carpet area of up to 60 sqm in metros and 90 sqm in non-metros, with a house value of up to Rs 45 lakh. Beneficiary families from EWS, LIG and MIG segments must not own a pucca house anywhere in India in any family member's name.
What reforms did States have to complete by June 2025 under PMAY-U 2.0?
The guidelines list single-window approval of building plans within 60 days, reservation of land and affordable housing zones, exemption of statutory and land use change charges, a mandatory 5 per cent EWS/LIG reservation in larger projects, adoption of the Model Tenancy Act and other land-related reforms.
Is there a credit guarantee for informal-sector borrowers under PMAY-U 2.0?
The guidelines say that, to help beneficiaries in the informal sector, a home loan product will be developed with the Department of Financial Services and banks and housing finance companies, supported by a Credit Risk Guarantee Fund. Ask your lender whether such a product is available for your loan.
Last updated 2026-10-24. PropNewz Team.
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