10 sources of Black Money

It is indeed heartening that somehow many of localcircles inputs make to Govt policy and schemes and last years notebandi was discussed by us before the PM announced the same. I want to illustrate 10 causes of black money in India

1.Real estate: Due to rising prices of real estate, the tax incidence applicable on real estate transactions in the form of stamp duty and capital gains tax can create incentives for tax evasion through under-reporting of transaction price.

2.Bullion and jewellery market: The purchase allows the buyer the option of converting black money into gold and bullion, while it gives the trader the option of keeping his unaccounted wealth in the form of stock, not disclosed in the books or valued at less than market price.

3.Financial markets transactions: IPO manipulations, rigging of market such as use of shell companies.

4.Public procurement: Public procurement has grown phenomenally over the years – in volume, scale, and variety as well as complexity. The Competition Commission of India had estimated total public procurement figure for India at around 10 to 11 lakh crore per year and provides ample scope of corruption due to rigged procurement process.

5.Non-profit organizations: Taxation laws allow certain privileges and incentives for promoting charitable activities which are misused and manipulated. Highlighted by FATF as well. Used to park funds of corrupt politicians and businessmen.

6.Informal Sector and Cash Economy: Cash transactions, large un-banked and under-banked areas contribute to the large cash economy in India.

7.Trade-based Money Laundering (TBML): Disguising the proceeds of crime and moving value through the use of trade transactions in an attempt at legitimizing their illicit origins.

8.Tax Havens: Tax havens are typically small countries/ jurisdictions, with low or nil taxation for foreigners who decide to come and settle there. Strong confidentiality or secrecy regarding wealth and accounts, very liberal regulatory environment and allow opaque existence, where an entity can easily be set up without indulging in any meaningful commercial activity and yet claim to be a genuine business unit, merely by getting itself incorporated or registered in that jurisdiction. This makes them highly desirable locations for multinational entities wishing to reduce their global tax liabilities. Multinational entities consisting of a network of several corporate and non-corporate bodies set up conduit companies in tax havens and artificially transfer their income to such conduit companies in view of the low tax regime there.

9.Investment through Innovative Derivative Instruments: Such as Participatory Notes (P-notes).

10.Hawala: It is an informal and cheap method of transferring money from one place without using banks etc. It operates on codes and contacts and no paperwork and disclosure is required. more  

View all 32 comments Below 32 comments
hightechlabs Professional black and green Money (Currency) Cleaning hightechlabs Laboratory is globally known for the Cleaning of all kinds of deface currencies anti-freezing fractional distillation method to extract high potent ssd chemical, ssd chemicals, Activation powder, mercury powder, machines cleaning chemicals, chemical ssd solution, ssd solution automatic and engage in latest chemical preservation technique to preserve huge amounts SSD Solution used to clean all type of blackened, tainted and defaced bank notes. Please contact us for any assistance on +27 732400059 Hightechlabs@chemist.com more  
Shri Anil Garg has raised a vital issue. Medium / Small Business / Individual tend to avoid paying due taxes on their hard earned money. Well, it not justified. But Govt should First deploy its energy and resources on Black Money stashed by Large Business abroad or invested in be-naming property, politicians will ill-gotten wealth and other major Tax evaders and should NOT allow the IT / GST Officials to harass Small Business men. That is ruining the retail business. more  
It is sad that people in India do not see the connection between high taxation by the government, too many tax loop holes and large government control. Make the government smaller and shrink the number of bureaucrats and you will see the corruption go down. more  
Spot on. 90% of black money in India are with netas and babus. Now they get worried about the balance 10 % only. Still worse, those who are to examine these cases belong to the original 90 %. Downsizing of babudom is the crying need of the hour not only to check corruption and generation of balck money but to prevent further wastage of precious public funds too. more  
For me it looks like this govt is indirectly giving black money to industries and getting back part of the money as party funding. Corporate debt has increasing day by day, Indian govt bailing out banks with tax payers money. the current finance minister is providing more black-money to market. more  
Humbly, I would like to submit that NPAs are a cumulative problem and not the fault of just this govt. but the result of lack of policies by successive govts. Also, if the money with the government is also black, then is black the new white? more  
These are instances of grey money, not black money. Blackmoney is earned through criminal means like bribe, smuggling, murder and so on. This is besides the money evading taxes as well. Grey money on the other hand, is earned through genuine means but has not suffered all due taxes. Grey money is as good as white money in so far as country's prosperity and all genuine purposes are concerned, with sole exception of Govt lamenting for having lost some of its revenue. Sometimes, even this may only be a misnomer because additional tax on these transactions could make these transactions far too expensive to be viable and hence, overall revenue of the Govt may still not be higher. For instance, stamp duty & registration cost on real estate is mostly 8 to 10% which is far too high, if computed on actual full value of investment. It is currently affordable on white part of the investment, bringing overall cost to say 5 to 6%, assuming 30 to 50% cash component. With demonetization, cash component has vanished, as we learn from news reports. Consequently, property transactions have shrunk as well. Overall revenue to the Govt from real estate is lower today with most white money transactions, than it was yesterday with white+grey money transactions. Thus, fight against black money is misdirected. It will be meaningful only if it is first directed against black money which lies with netas, babus and criminals. After that, incidence of taxes must be reduced to encourage people to convert grey into white, without increasing their tax incidence and making transactions unviable. But is it possible for a govt that is run by babus? more  
Post a Comment

Related Posts

    • Aadhar updation still in nineties mode

      You need to stand in queue for few hours in morning for tokens (only 20 per day) and then wait for your turn like 1980s Government of India should launch online tokens, increase the dail...

      By Ruchika L Maheshwari
      /
    • Selenium in wheat and people turn bald

      Over 300 individuals in Buldhana, Maharashtra, experienced sudden and severe hair loss, traced to wheat supplied through India’s Public Distribution System. Investigations by Padma awardee Dr...

      By Seema Shah
      /
    • Mahakumbh Loot by various agencies

      Today the Dainik Bhaskar paper has carried the LocalCircles survey as main headline of the paper on how people going to Mahakumbh have been subjected to overcharging by all agencies.

      By Seema Shrivastava
      /
    • Toll and Tax loot of India

      200 km toll charges Rs 500 Assuming Car mileage of 15 KM per liter Diesel, Cost of fuel for 200 km is Rs 1300/- Toll Charges Rs 500 Cost of travel Increased by 38...

      By Amit Mishra
      /
    • Society is a multiple reflection of media

      Many inappropriate things are shown in media like use of abusive language, violence, smoking, drinking, details of how several crimes are committed. Media personnel give the argument they show what...

      By Chander Jain
      /
    • Regulation of video OTT platforms must says SC

      I am pleased to share with all that yesterday supreme court reprimanded the Govt and told them to regulate obscene content. Youtube was specifically mentioned.

      By Vinita Agrawal
      /
    • Stampede on New Delhi station

      LocalCircles CEO has rightly put out on social media that despite people listing out concerns of safety, the Ministry has failed to act.

      By Garima Sharma
      /
    • Edible Oil prices

      A weaker rupee is pinching consumers, with cooking oil prices increasing 5% in past fortnight. With 60% imports, the rupee's depreciation coupled with an increase in cooking oil prices at their ori...

      By Garima Sharma
      /
    • Rules for podcast and audio video platforms

      India has taken bad taste, provocative content to the next level with these stupid comedy shows full of crude humour. It doesn’t go with the heritage and culture of this country. I...

      By Ajay Dutta
      /
    • Mahakumbh Mela feedback

      World's largest human gathering for Maha Kumbh . Security, cleanliness efforts, Toilets and changing rooms for women are appreciable. But 1. There should have been entry in Prayagraj only afte...

      By Chander Jain
      /
    • Excellent work on airfare reduction to Mahakumbh

      I want to sincerely commend all members and LC manager for getting airfares to Prayagraj reduced from 25-35K to 10-15K range. Honestly for the first time I understood what the collective...

      By Sanjit Jha
      /
Share
Enter your email and mobile number and we will send you the instructions

Note - The email can sometime gets delivered to the spam folder, so the instruction will be send to your mobile as well

All My Circles
Invite to
(Maximum 500 email ids allowed.)