Draft Scheme for Channelizing Black Money
India needs Infrastructure development in a big way. Any amount of foreign investment will not be sufficient for the infrastructure development India need and that too in a rapid phase.
No person is without tension in safeguarding the money earned through dubious means and 60 to 75% of the people may be ready to disclose provided if it is simple and easier to do it.
Earlier attempts by the Government through voluntary disclosure schemes have not brought desired results as many people are averse to facing tax men. My intention is to unearth the money as well as to make the people comfortable in their disclosure. This will help them to come clean and to participate in Nation’s development.
Central Government if it deems fit can issue bearer bonds with the caption “India Infrastructure Development (bearer) Bonds” with the permission of the Supreme court which is now taking this issue.
i. No need to approach Swiss banks, as the account holders themselves will apply for bonds
ii. Simple and easy way for the people to participate
iii. Useful for the country to use the funds for productive purposes
iv. Procedural hurdles are removed
v. Lowest cost of funds and many more.
Scheme in brief
1. Name of the Bond: India Infrastructure Development (Bearer) Bonds (IIDB)
2. Currencies: INR, US dollar & Euro
INR 1, 00,000 each bond
US$ 1000 each bond
Euro 1000 each bond
4. Format: a) Physical and b) E-Bond
5. Type of Bond: Bearer bonds
6. Lock-in-Period: 5 years
7. Repayment: 20% from 6th to 10th year
8. Interest for the first five years – Nil ( to compensate the revenue loss to the country)
9. Rate of Interest from the end of the 6th to 10th year
6th year: 5.0% tax free
7th year: 6.0% tax free
8th year to 10th – 6.5% tax free
Rate of Interest for Foreign currencies can be decided separately.
10. Immunity: From Direct & In-direct taxes and also from attachment by Courts.
11. Tenure: 1 year from the opening of the bond Issue
12. Incentives: Early Bird Scheme
a. Within 30 days from the opening of the Issue of bonds 2.5%
b. Within 31 – 60 days from the opening of the Issue of bonds 2.0%
c. Within 61 – 90 days from the opening of the Issue of bonds 1.5%
d. Within 91 – 120 days from the opening of the Issue of bonds 1.0%
e. Within121 – 180 days from the opening of the Issue of bonds 0.5%
f. Above 180 days – nil
13. Quantitative discounts
a. Up to INR 10 Crores or Equivalent in Foreign currency – 1% of the Bond value
b. INR 11 to 50 Crores or Equivalent in Foreign currency – 1.50% of the Bond value
c. INR 51 to 100 Crores or Equivalent in Foreign currency – 2.00% of the Bond value
d. INR 151 Crores & above or Equivalent in Foreign currency – 2.50% of the Bond value
14. E-bond: through a dedicated Payment gateway for the people to apply ( like e-deposit ) operated by the banks
a. Simple menu to capture the essential minimum details
b. Distinctive numbers with Bar-codes and scan deduction
c. High security to avoid duplicate gateways
d. Redemption will be made to the same account from where initial subscription is made for the Bonds.
e. Option to indicate any other account with bank’s name, account number and IFSC / NEFT / Swift code
15. Physical Format:
A Central server may be established for this purpose and all the Banks and nominated branches of various banks can be connected throughout India and other selected foreign locations. Apart from the Banks selected, Post offices can also be linked to have all India presence. Amount can be collected across the table without questions and bonds can be issued right across the table using a special format with “Bar” codes with bond serial number, type of currency, denomination and the number of bonds.
For Payment of Interest and for redemption, the subscriber shall be asked to furnish their bank account number and IFSC code with their unique Bond id: OR Coupons to get the Interest and redemption amount across the counter.
16. Other concessions:
a. Government and Public Sector undertakings may be allowed to accept bearer bonds for EMD and Security deposits for participating tenders.
b. Banks may be allowed to take the bonds as collateral security for lending
c. Facility for assignments and transfer.
Other features can also be added to make the issue attractive, simple and safe for the subscriber.
There are many issues to be considered, but it is only a model that can be discussed and deliberated by the government.
In my opinion the government will get unimaginable amount, which can be used for big Infrastructure development that India needs immediately.
Instead of force, it allows voluntary participation and put the money to productive purposes.
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