Important Facts For Prelims
- 02 Nov 2019
- 2 min read
Why in News
A High Level Advisory Group on Trade Policy (HLAG) headed by Surjit S Bhalla has recently suggested the government to issue ‘Elephant Bonds’. This will help India to recover up to $500 billion of black money that is stashed overseas.
- An Elephant Bond is a 25-year sovereign bond (a bond issued by a national government).
- This bond is issued to those people who declare their previously undisclosed income and are then bound to invest 50% of that amount in these securities.
- The fund gathered by the issuance of these bonds is utilized to finance infrastructure projects only.
- HLAG recommended these bonds in order to boost India’s growth by utilizing the collected money (via this mechanism) to fund infrastructure projects in the country.
- One of the key features of the proposed mechanism is that those disclosing their black money will receive immunity from all local laws including those under foreign exchange, black money laws, and taxation laws.
- This would enable people to bring their offshore undisclosed wealth into India without fear of prosecution.
- Countries like Indonesia, Pakistan, Argentina, and the Philippines have already launched their own tax amnesty schemes for persons who disclose undeclared income without the risk of prosecution.
- Tax amnesty is a limited-time opportunity for a specified group of taxpayers to pay a defined amount, in exchange for forgiveness of tax liability (including interests and penalties).
- The move is also expected to bring down the real interest rate. It will also strengthen the rupee.
- The HLAG was set up under the Ministry of Commerce and Industry in the year 2018.