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Black Money Act
Black Money Act
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, an underground economy of undisclosed wealth, has plagued India for decades. The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, commonly known as the Black Money Act, was introduced in India in 2015. The Black Money Act in India aims to tackle the issue of undisclosed foreign income and assets by imposing stringent penalties and facilitating the recovery of black money stashed abroad. It enables the government to investigate and prosecute individuals or entities found to possess undisclosed foreign assets. Continued efforts, including stricter enforcement, digitalization, and improved governance, are necessary to root out black money completely and foster a transparent and equitable economic landscape in India.
Demonetization, a significant economic move in 2016, aimed to curb black money and promote a cashless economy. By invalidating high-denomination currency notes, the government sought to expose unaccounted wealth and encourage digital transactions. The government has also mentioned that the generation of black money after demonetization has decreased considerably. While demonetization disrupted the black money ecosystem to some extent, its long-term impact on eliminating black money remains a subject of debate.
In 2016, the government introduced the Black Money (Undisclosed Income and Financial Transactions) Scheme, providing individuals an opportunity to disclose their unaccounted wealth by paying a penalty. The Black Money Declaration Scheme aimed to incentivize individuals to come forward and legitimize their black money holdings. While it received a lukewarm response, it did contribute to the government's efforts in bringing undisclosed wealth into the formal economy. The Black Money Act in India coupled with the Black Money Declaration Scheme helped much in combating the pervasive issue of black money. They have contributed significantly towards tackling undisclosed wealth.
While the existence of black money is detrimental to the overall economy, it is essential to acknowledge the perceived advantages associated with it. Among the advantages of black money, some argue that it enables flexibility in financial transactions, especially in cash-dependent sectors. It can facilitate liquidity in times of economic uncertainty and offer opportunities for informal employment. However, these advantages are short-lived and overshadowed by negative consequences, such as reduced tax revenues, increased income disparity, corruption, and distorted market dynamics. While some perceive certain advantages associated with black money, it is crucial to recognize the long-term detriments it poses to the economy.