The Government may provide another amnesty to the income tax defaulters in the country. However, this amnesty is unique as the defaulters will have to invest part of their undisclosed money in “Elephant Bonds”.
What are the elephant bonds?
- Elephant Bonds are 25-year sovereign bonds in which tax defaulters who declare undisclosed past income will have to mandatorily invest 50% of the amount in them.
- There were recommended by a high-level government-appointed committee on trade and industry which suggested the issue of Elephant Bonds to people for declaring undisclosed income.
- The amount in fund gained from these bonds will be used only for infrastructure projects, both new and improved.
- This Amnesty scheme will help the State treasury to raise tax revenues along with increasing the number of taxpayers and beneficiaries in tax base who had not declared their assets previously.
Why they matter?
The elephant bonds are a necessary part of the Indian Government’s carrot and stick policy. They will allow past tax defaulters to join the mainstream without attracting penalties that may make them turn away from the law.
This will provide a conducive way to increase tax revenue and improve funding for infrastructure projects which are a critical part in increasing economic growth.