Residents of every country need to give a certain portion of their income as tax, to the government. The amount of income which is hidden or the tax which is not paid is known as black money.
But keeping of black money is illegal. Therefore the black money holders have found out various ways to convert their black money into white money, taking advantage of the loopholes present in the tax system.
Ways to Converting Black Money into White Money
Following are few of the ways to convert black money into white money:
Fake Entry for Loan– In this way, black money holders give their black money to their close friend’s relatives and in return take cheques from them.
Doing Charity Work- Often black money holders give away their black money to different charitable foundations for some social causes. But they get back the money as white because of the presence of their men in the foundations.
Income Earned from Agricultural Activities– For this, the black money holders have to own a land which is capable of being used for agricultural purposes. They show their black money as income earned through agriculture and thus convert their black money into white.
Income Earned In Cash From Professions– Often black money holders take the help of professions such as teaching and giving private tuitions to convert their black money into white. By this way, they show the entire amount earned in cash and thus the money becomes white.
Selling Personal Stuff- This is one of the most commonly used ways to convert black money into white. Here, the black money holders go to jewellers and provide them with all the black money. In return, the jewellers give them a cheque along with a bill as well. This bill shows that the money has come from the selling of jewellery.
Making Investment– Investing is a popular method for getting rid of black money. Here, the black money holders invest a certain amount of money in liquid cash for buying insurance policies and paying their premiums.
Providing Your Close Relatives with Black Money as Gifts– In this method, the black money holders give all their black money to any of their relatives, and they take the same amount of white money from them, in the form of cheques.
Opening Of Bank Accounts– Here the black money holders open bank accounts individually for each and every family member. After that, they deposit all the black money, partly in all of the accounts, thus making money
Real Estate– Here, the black money holders make fake deals in the field of real estate. Later on, they cancel the deals because of not getting payment properly. In this way, their black money is converted into white.
Surrendering before Tax Authorities– Almost no black money holder follow this method. Here people having black money reveal their actual income and pay taxes on them.
Thus their black money is converted into white. Black money is cancer for the economy of a country and hence get rid of it.