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How to Purchase house in USA- Legal Provisions & clauses?

Nidhi Agnihotri 
on 07 November 2014

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How to Purchase house in USA- Legal Provisions & clauses? ( For Indian Resident)

Q1. Who is Indian Resident? RBI  clauses applicability?

Ans. The conditions for a person to be resident of India are as follows under section 2(v) of the FEMA Act:

(v) "person resident in India" means-

(i) a person residing in India for more than one hundred and eighty-two days  (182 days) during the course of the preceding financial year but does not include-

(A) a person who has gone out of India or who stays outside India, in either case-

(a) for or on taking up employment outside India, or

(b) for carrying on outside India a business or vocation outside India, or

(c) for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period.

RBI clauses not applicable to “Non-resident-Indian Citizen.”

Q2 .What are capital account transactions? Can Resident Invest in properties in USA?

Ans. Capital Account transactions includes those transactions which are undertaken by a resident of India such that his/her assets or liabilities outside India are altered ( either increased or decreased).This imcludes purchase of immovable properties.Yes, resident can invest in properties abroad-

FEMA Notification no 1/2000 dated 3-5-2000 includes permissible capital account transactions

- Acquisition and transfer of immovable property outside India by person resident in INDIA

- Loans and overdrafts (borrowings) from a person resident outside India;

Subject to limitations & circulars issued .

Q3. What is the present limitation of making investment abroad for an individual Indian resident?

Ans. Individual covered under Liberalized Scheme limit is up to USD 125,000 per annum per person. No prior approval of RBI required upto this limit as per RBI/2014-15/10 Master Circular No. 6/2014-15

Q4.What is the Liberalised Remittance Scheme of USD 125,000?

Ans. Under the Liberalised Remittance Scheme, all resident individuals, including minors, are allowed to freely remit up to USD 125,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both.

Q5.Can an individual, who has availed of a loan abroad while as a non-resident Indian repay the same on return to India, under this Scheme as a resident?

Ans. This is permissible.

Q6. Are there any restrictions on the frequency of the remittance?

Ans. There is no restriction on the frequency. However, the total amount of foreign exchange purchased from or remitted through, all sources in India during a financial year should be within the cumulative limit of USD 125,000

Q7.What is the best time to make investment?

Ans. The limit is USD 125000 per annum i.e cumulative for complete year of all payments per person. Property purchased in name of family members, limit can be availed per person i.e per family member name. Consecutive payment can be made in month of March & April both will be covered under two different financial years.

Q8. Requirements to hold property abroad?

Ans. 1.Registered USA Address & Agent.

2. US TAX ID Number.

3.Account in Foreign Bank.

Q9. Form to be filled for LRS Scheme?

Ans. Application cum Declaration for purchase of foreign exchange under the Liberalised Remittance Scheme of USD 125,000 for Resident individuals

(To be completed by the applicant)

I. Details of the applicant

a. Name …………………………..
b. Address…………………………
c. Account No……………………..
d. PAN No………………………….

II. Details of the foreign exchange required

1. Amount (Specify currency)………………………………
2. Purpose ……………………………………………………

III. Source of funds: ………………………………………….

IV. Nature of instrument

Draft………………………..
Direct remittance…………

V. Details of the remittance made under the Scheme in the financial year (April- March) 20.. – 20..

Date :………………
Amount :………….

VI. Details of the Beneficiary

1.Name ……………………..
2.Address ……………………
3.Country ……………………
4*.Name and address of the bank……………………….
5*. Account No……………………………………………..

(* Required only when the remittance is to be directly credited to the bank account of the beneficiary)

This is to authorize you to debit my account and effect the foreign exchange remittance/ issue a draft as detailed above. (strike out whichever is not applicable).

Declaration

I, ………………. …………(Name), hereby declare that the total amount of foreign exchange purchased from or remitted through, all sources in India during the financial year as per item No. V of the Application, including loan extended or gift made in rupees credited to NRO account of non-resident close relative(s), is within the limit of USD 125,000 (US Dollar one lakh twenty- five thousand only), which is the limit prescribed by the Reserve Bank for the purpose and certify that the source of funds for making the said remittance belongs to me and will not be used for prohibited purposes.

Signature of the applicant

(Name)

Certificate by the Authorised Dealer

This is to certify that the remittance is not being made by/ to ineligible entities and that the remittance is in conformity with the instructions issued by the Reserve Bank from time to time under the Scheme.

Name and designation of the authorised official:

Place:

Signature:

Date: Stamp and Seal

http://www.rbi.org.in/scripts/FAQView.aspx?Id=66

http://business.gov.in/doing_business/cap_account_transaction.php


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