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Black Money:Generation and Eradication
Black Money: Generation and Eradication
Tags: Gig Economy Economy WTO WTO Public Stockholding MSP Economic Growth Masala Bond Environmental Performance Index Forecast of Economic Growth Functions of the Finance Commission
Black Money encompasses all types of funds that are earned through different types of illegal activities as well as legal incomes that are not recorded for taxation purposes. The proceeds of black money are usually dealt with in cash because either the traded goods or services are unlawful or the transactions do not comply with the prevailing government laws and regulations. Thus, black money proceeds are received by underground economic activities and they can be hidden, spent on shadowy deals or made to appear legitimate through money laundering. Money laundering is an illegal financial crime of generating large quantities of money through criminal activities, terror funding or drug trafficking.
The generation of black money is a common problem for many countries and anti-money-laundering legislations are in place in most of them through which they aim to tackle the menace. Activities in the black market that can lead to its generation include smuggling, human trafficking, embezzlement, transaction of prohibited drugs, corruption, sexual offences, illegal mining and many other unlawful activities. The money so earned is concealed from federal tax authorities and they are mostly accumulated by criminals, tax evaders or even white-collar professionals. Large unbanked and under-banked areas are fertile grounds for the cash economy that further promotes the generation of black money.
Much of the black money reports which have been submitted to the government aim towards transactions of land and real estate, financial market, jewellery and bullion, external trading and the cash economy. A corporation usually generates the same through manipulation of accounts through out-of-book transactions, parallel book of accounts, and manipulation of sales receipts, capital, expenses and under-reporting of production.
To curb the menace black money bill 2015 was enacted by the parliament which is also known as the Undisclosed Foreign Income Assets and Imposition of Tax Act. Its primary aim is to stop black money or undisclosed foreign income and assets together with the imposition of penalties and tax on such income. The act was passed by both houses of Parliament and it provides a time frame for an individual to disclose assets to avoid prosecution. The valuation of all undisclosed assets is done according to Rule 3 of Black Money and Imposition of Tax Rules, 2015. There are different types of penalties within the act and they are imposed on violators accordingly.