Elephant bonds can bring back $500 billion stashed overseas

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News:A High Level Advisory Group on Trade Policy(HLAG) headed by Surjit Bhalla has suggested that the Centre could bring up to $500 billion of black money if it issues elephant bond.

Facts:

About Elephant Bonds:

  • The elephant bonds are a way for people to bring their offshore undisclosed wealth into India without fear of prosecution.
  • Under this mechanism,the people disclosing their black money will receive immunity from all laws including under foreign exchange, black money laws and taxation laws.
  • Once they declare their offshore money,they will be asked to invest 40 % of that amount in these elephant bonds.A fixed coupon security will be issued. 
  • Further,45% of the wealth brought in by subscribing to these elephant bonds will be credited with the depositor but the remaining 15 % will be collected as tax deducted at source by the government.
  • The fund gathered by the issuance of these bonds will be utilized to finance infrastructure projects only.

Additional information:

About Bonds:

  • A bond is a debt instrument in which an investor loans money to an entity (typically corporate or government) which borrows the funds for a defined period of time at a variable or fixed interest rate. 
  • Bonds are used by companies, municipalities, states and sovereign governments to raise money to finance a variety of projects and activities.