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.
ADVANTAGES
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
3. Denominations:
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.
N. Srinivasan, 21 Nungambakkam high Road, Nungambakkam, Chennai 600034,
Mobile 9444125731 E-mail snarayansamy@yahoo.co.in
We can not give free hand to persons who are responsible to weak the Indian economy of the country. They should be punished by imposing 33.00% tax plus 100.00% penalty and remaining amount may be treated as white money, failing which they should be properly punished under criminal offence and their assets may be frozen and treated as government property. Such cases should be decided within time frame as guided by the Supreme Court.
the govt allowed to create black money on many ways, later they want to get back this type of back door entry. how can we acept. instead of govt must take long standing steps first.
1. ask every one of the assessee who files income tax return must file their wealth tax return.
2. wealth tax exemption must be raised upto 5 crores and withdraw all exemption.
3. charge wealth tax at the rate of 5% initially.
4. if any one omitted to give details of any assets he hold in any one of the year must be taken over by the government.
5. all land areas should be computerised.if any one want to buy land or building may be able to check on line who is the owner of the land.
Too innovative and good scheme, the govt. Should try to bring such measures as in a country of vast population it is impossible to bring black money via any hard rules. It is possible only if peoples initiates it themselves. But some measures are required to be incorporated so as to bring accountability for the exiting
You are givng free hand to persons, govenment crrupt emplyess- politicain who earned money by way of crinal acts, bribe, corruptions
They should get the proper punishmnet for all these acts.
Concept of globalization is the catch 22 issue unintelligibly world over got caught Micheal Trevor said except Japan every one is trying to sell same old things in a new package. so no real innovation of new products that way there is a great stagnation all over.
Naturally black money bound to shoot up as each is trying to hide the so called non intrinsic black money afterall value of your cash is systematically eroding, more so if you hide.
the problem became chronic due to governments participated by their so called statutes.
in fact all economies are dipping downward.
i think at this rate economies recovery is indeed bleak is the fact.
any gimmicks cannot work just because economies are not really improving.
fact is a fact .No point in any gimmicks just because just your IR in india is fast deteriorating. govt if wise need to help develop new real products per innovation of people.
People only can innovate no government can innovate. so Americans say No government can really save the people it is only very person himself can save himself like a drowning man alone can save himself not others at the waterfalls like Niagara falls….like that economies are at the cross roads of very many economic waterfalls.tks
SHOULD FORWARD THIS SCHEME TO THE PM/FM.CAN RENAME IT AS “THE MAHATMA GANDHI BOND” AND ENSURE THAT THE SAME ARE NOT TRANSFERABLE EXCEPT IN CASE OF DEATH OF THE ORIGINAL BUYER.THE BONDS SHOULD BE EASILY ISSUED LIKE FD BY ALL BANKS AND THE GOVT CAN GIVE 2% INTEREST FROM DAY ONE AND KEEP THE ISSUE OPEN FOR 180 DAYS.GOOD SCHEME.THE NEW GOVT SHOULD GIVE A TRY AND CLEAR THE ATMOSPHERE OF BLACK MONEY.THE SCHEME WOULD ALSO ATTRACT ALL EXTRA CASH FROM THE SYSTEM THEREBY INCREASING THE WORTH OF INR AND CHECK UNNECESSARY SPECULATIONS IN GOLD/SILVER/REAL ESTATE ETC.ONLY INVESTMENT IN INR SHOULD BE ENCOURAGED SO THAT ALL AMOUNT HELD IN DOLLARS/EUROS/POUND /GOLD/SILVER/REAL ESTATE/ARTS ETC WOULD CONVERTED IN INR AND INVESTED IN THE BONDS.
I fully agree and appreciate the model designed by Mr. Srinivasan to channelize the black money lying idle in Swiss or other banks. Instead of forcing the so called owner of such money earned through dubious means, the Govt. should consider bringing about some attractive schemes to attract the hoarders, bringing this money back to India. The model by Srinivasan is one of such kind and need to be accorded a positive thought with certain modifications
Very simple solution. For two years non corporate income tax 10% only for all income slab with basis exemption of 250000. See results. No scrutiny no survey no search for two result. No amnesty.
Innovative Scheme; the lock-in-period (without interest)can be reduced to three years; if transfer is allowed within three years, source for the transfer price, which is received from the transferee, is to be explained or not? i.e. whether it is also from Black Money or white money?
The draft is a very good one and most practicable at the moment. It may also be extended to all citizen including Government employees as a one time measurement. It may also include another clause, if after the expiry of the scheme any money found as unaccountable should be confiscated without any claims in any court of law and punitive actions would be initiated.