Mr. Lakshman, a Citizen of India, left India for employment in USA on 1st June, 2002. Mr. Lakshman
Purchased a flat at Bhopal for Rs. 15 lakhs in September, 2003. His brother, Mr. Govind, employed in
New Delhi, also purchased a flat in the same building in September, 2003 for Rs. 15 lakhs. Mr. Govind’s
Flat was financed by a loan from a Housing finance company and the loan was guaranteed by
Mr. Lakshman. Examine with reference to the provisions of Foreign Exchange Management Act,1999,
(FEMA) whether purchase of flat and guarantee by Lakshman are capital account transactions?
