What’s Black Cash – Black cash is tax. It may be brought in through both illegal and legal means. Nearly all the money that is black is the income received in cash not shown to the authorities for tax purposes and not accounted in books. How can the black cash get created?
Corruption – Mr. Corrupt, an officer in government service requires Rs.1 lakh from Mr. alternative for doing a favour. Mr. Money Payer hands over Rs. Lakh to the policeman in cash. This cash is not going to be accounted in the books of Mr. Corrupt and he will not pay any taxes on it. Count 1 – Rs.1, 00, 000 black cash is created.
Sale of property – Mr. Grasping purchases a property from Mr. Crook for a total sales value of Rs.50 Lakhs. He takes Rs.35 Lakhs in cheque/DD and the balance in cash. He pays the stamp duty on Rs.35 Lakhs, and the vendor pays capital gain tax contemplating the value as Rs.35 Lakhs. Count 2 – Rs.15, 00, 000 black cash is created. Sale of goods/services without invoice – You purchase a couch set from the furniture dealer.
What’s the cost?
The retailer will tell the cost is Rs. Plus taxes at 14.5%. Any reduction?
The answer from him may be Yes madam, I will offer it at Rs.58, 000 without the statement. If you need, I will write on a bit of paper or on a quote. Count 3 – Rs.58, 000 black cash is created.
Accounting for expenses that are fictitious – A businessman tells his CPA I cannot pay much tax. By booking fictitious expenses do something, reduce the taxes, The CPA adapts. In case the businessman declares a gain of Rs.15 Lakhs against the real gain of Rs.25 Lakhs, black cash of Rs.10 lakhs is created. Count 4 – Rs.10 Lakhs black cash is created.
How’s it converted?
The hard part is transforming the black money into white cash with no taxes. In all the preceding cases, the individuals who’ve brought in money in cash cannot deposit it in a jar. Right? Thus, they will have to hoard the money someplace, say in a bank locker, bag, etc. Or they are able to also spend this sum in money towards the purchase of property, goods that are white, etc. Let us recognize the methods for converting black money.
Showing fictitious sales – there is a picture casted by the son of the strong politician. This film was an absolute flop. But, movie ran for a year in a Theater. During those times, folks were discussing that the black cash brought in by the dad is converted to white by revealing the income from the film! Reserving fictitious sale in the books of the firm converts with the help of businessmen the cash brought in through corruption or illegal means.
Raise the sale cost of an advantage – Among my customers decided to purchase a property from the senior government officer for an amount of Rs.42 Lakhs. However the Policeman needed him to pay Rs.60 lakhs in cheque. In turn, he needed to return the difference quantity of Rs.18 Lakhs and added stamp duty/registration fees in cash to the buyer. Thus the Policeman converted Rs.18 Lakhs of black cash to white without paying any taxes.
Hawala Course – Have you learned about hawala transactions? If not, I am going to tell you in words that are simple. Suppose Mr.ABC, a politician or a government official in Bangalore has Rs.25 Lakhs in cash. Since it’s cash that is black, he cannot deposit the same in the bank. So, a hawala broker is identified by him. The Hawala operator requires the money in Bangalore and thru his counterpart, hands on Rs.25 Lakhs worth in dollars/pounds/dirhams in a foreign nation to his/to his representative. Mr. ABC gets this cash back to India as foreign direct investment or a seed fund in a personal company, etc. Or he might choose to invest overseas in properties / shares. So, he converts cash that is black to white without paying any taxes.
Depositing in banks less than Rs. 50000 – This course is taken by little time operators. They start several bank accounts and deposits money up to Rs. At a time. Recall, if you’ve to deposit over Rs.5000 0, you’ve to give PAN details to the banker. Mainly, these sort of trades that are small goes undetected by the income tax section without paying any taxes and therefore, black cash is converted to white.
Agricultural income – agricultural income is exempt from income tax. What this means is the cash brought in from the sale of pepper, paddy or wheat is exempt from tax. Therefore, the people that bring in cash that is black will get a reception that is fictitious from dealers in agricultural commodity as if the products have been sold by them. For the benefit of records, these individuals show or will get the evidence of ancestral property in hamlets!
Presents from pals and relatives on occasions – Any number of cash is exempt from Income Tax. Is it not a straightforward method to convert cash that is black to white? Easy, show the cash received from relatives in your boy or daughter’s birthday as presents! Presents from buddies and non-relatives bring income tax. But those that have enormous cash that is black can show pay and present taxes. Still the cash brought in by corrupt practices can be converted to white. Certainly one of the classic examples is the sum of present declared by a former chief minister who paid taxes that are enormous during that year. She declared around Rs.200 Crores as present received from her well-wishers and paid taxes on it!
How People try to convert their Black money into White Money
Investing in Property – Most of the Middle Class Black money earners are trying to invest their black money in purchasing the property and as we all know after the announcement by Honorable Prime Minister Narendra Modi on 08 November 2016 at 08:30 PM regarding Old 500 & 1000 notes are getting banned from mid-night. The people are purchasing the property on high rate with old 500 & 1000 note in non-authorized colony through power attorney.
People are buying Goods/Services where Identification is not mandatory with cash. For Example:- white goods, building houses and it’s interiors, etc.
People are also doing the Donation in Holi-places and for the medical seat, over a crore of rupees to be paid as a donation in cash.
People are buying gold / precious metals – instead of accumulating cash, people are buying gold and any other precious metals. People are buying this in small quantity from different-different jewellery shop.
Election – As per the Election Commission of India, a candidate can maximum spent Rs. 70 lack for campaign in Lok Sabha Election but no body can believe that they are spending only Rs 70 Lack for campaign in Election. As per my understanding they spent my be Rs. 25-30 Crore in an Election.