What are Elephant Bonds?
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- By Taxmann
- Last Updated on 29 July, 2021
With an aim to gain access to the global environment and make recommendations for boosting India’s Share and importance in global merchandise, etc., the Government of India constituted a Committee called the High Level Advisory Group (HLAG) in September 2018. This committee has made various recommendations including the ones for bringing back the black money held overseas by tax evaders and contribute to the progress of the nation.
In 2012, CBI estimated that Indians have USD 500 billion of illegal funds in foreign tax havens, more than any other country. As per the report of the Global Financial Integrity, a think tank, USD 213.2 billion was shifted out of the India over 61 years through illegal means.
In order to bring this money back, one of the major recommendations made by the HLAG is issuing of ‘Elephant Bonds’. Basically, the “Elephant Bond” is an amnesty scheme for bringing the unaccounted wealth or black money back to India. The amount disclosed under this scheme will be applied as follows:
Example: If Mr. A discloses Rs. 50 crore under this scheme then the said amount shall be applied as follows:
|Particulars||Percentage||Amount (in crore)|
|Amount payable as tax by Mr. A||15%||7.50|
|Amount compulsory to be invested in Elephant bonds||40%||20|
|Amount available with Mr. A||45%||22.50|
The amount invested in such bonds will be used by the government for the purpose of the Infrastructure development in India. This scheme can be availed by any person having undisclosed income and willing to disclose it. The person disclosing his income under this scheme will get immunity from penalty & prosecutions under various laws including foreign exchange act, black money laws and taxation laws.
These bonds will be issued for long-term and will have maturity period ranging from 20-30 years. Further, Interest on these bonds will be available at the coupon rate of 5% and the same will be chargeable to tax at the rate of 75%.
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