In this article, I have discussed the black money and how this is making all the things costly; how to convert this money into white money; steps taken by government to takeover it; where black money is mostly safer? Ways used by people to earn illegal money? Reasons for holding black money? Which are the countries involved in its transfer. After reading the article you will be able to answer all the questions.
Black Money in India
If we come to define the term black money we can say that it actually refers to the money that is being earned in black market and/or on which the tax is not paid. Though this black money trend has prevailed in every other country but this problem is quite serious in India. According to a report being published in a business magazine, India possesses more black money as compared to the rest of the world. Other countries that failed to top the list include Russia, United Kingdom, Ukraine and China.
At first, the Government of India was not willing to disclose the total amount of black money either in their country or the money transferred in foreign accounts, however, official sources estimate this amount to be around $ 1.4 trillion. Amazing isn't it? Well the Indian nation is quite wealthy in terms of their black money savings. It is very thwarting for a nation to be known as a leading black money holder because this is the money that has been illegally saved by the people into their respective accounts. Most of these personal accounts belong to corrupt politicians, high-ranked officers and industrialists. This total amount accounts for around 40% of India's Gross Domestic Products and hence one can imagine how the growth could prosper if India gets back this money.
It is a known reality that 450 million Indian people are living below the threshold of poverty and that means on average a poor person gets less than Rs. 1.25 (Indian currency) per day. So why the Government has become a silent spectator of this issue and cannot think of bringing the black money back to the country which can later be used for the prosperity of the Indians. The country has already taken enough loans from foreign countries and it has been impossible to get free from these debts since then. Beholding the taxpaying population of India, it has been seen that 31 million Indians pay annual taxes that means that only 2.5 % of the whole population is in fact paying taxes. The number of people legally responsible for tax payment is 10 times higher than this.
Ways used by people to earn black money
There are number of ways used to earn black money in India. One super way that comes at the top of the list is making money and not paying tax on it. It is where you utilize the money in a way that it cannot be taxed including sending the cash to a friends' bank or especially a foreign bank where the Indian Government cannot access easily. Black money has also been earned by using criminal ways such as payment to kidnappers, drugs and weapons business (smuggling), bribes taken on the grounds of immorality etc. some very common sources of black money are described here in some detail.
Escape from taxation: This is considered as the root source of black money as it allows the holders to hide money from the government in order to evade the taxation.
Voting scenario: This is the time when all the political members pull up their socks and get ready to earn as much black money as possible. In reality they ask for money to support the election campaigns and thus they get a chance to use less and earn more later.
Under the table income: : People approve a project and get commission on it. Such people never bother to understand the danger of approving an unethical project and they simply do it for the sake of earning black money.
Taking bribes: Anything that people think they can undertake can only become possible if they receive money from the other party. This bribe taking system is very common in India and has become an important factor in any work dealing.
On the name of social welfare: This trick of making black money in India is prevailing in the high society as the people are aware of the fact that government would definitely have no objection if they channel their cash into a welfare project.
Overnight visa offers: Using this people open an office (rental) in aside area and claim to provide work visa in few days. Once a person is convinced to their bogus ideas they ask to submit non-refundable visa registration fee and give a time limit. After they have gathered enough money, they simply close their offices and run away.
Commercial dons: In certain areas where the control of the government is not strong, people demand money from the businessmen and if they do not pay money, they do not allow the businesses to run in their area.
Smuggling: This includes all kinds of smuggling ranging from drugs and weapons to humans.
Property: Any property in the form of house or building has shown the way to create black money. People simply sale or purchase the property and hide it to evade taxes by either taking half of the money cash and rest is taken or given as a cheque.
investing in a foreign market: Many times people use this way by creating a fake company in any foreign country where usually the tax is less and then notify an investment being made in that. Afterwards the money is diverted back in no time
Reasons of holding black money
Looking at the reasons of why black money in India is common, we get to know that it is being used as an excuse to evade legal taxes. In regards to their general perspective, it can be said that they are being afraid of paying the groundless taxation. But this cannot be considered as a reason as it clearly indicated towards the manipulation to conceal cash illegally
Another reason that has been notified is the lack of trust on the ways that the government would utilize the money taken from the people on the name of taxes. People are quite unsure that the money collected from them is used for the nation's development rather it is used to fill the pockets of income tax officers and other related people. Most of the tax money is wasted in buying defense assets and is used for military purposes.
Where black money is mostly saved?
You must be wondering that if the Indian people have such great amounts then why not it shows or where the money is kept in order to hide from the government. Well they all have cleverly saved their money in foreign banks particularly the Swiss banks. It has been reported that nearly 80,000 Indians travel to Switzerland every year and most of them arrange more than 3 or 4 trips in a year. Now you can have an idea that what business dealing actually attracts the rich Indians towards Switzerland this. Swiss banks are considered the safest in the world as they do not share bank account information with anyone. Black money from across the world is saved in the Swiss banks.
When asked from the government correspondents on this issue, their statements seemed to be unsatisfactory as saying that the Government has pursued the court for this purpose but the legal officers refused to take any action against the black money holders unless each and everything is proved by the Swiss bank. Furthermore the court will only be responsible to issues orders of fine or bringing back of money on the basis of Swiss report.
Astonishingly the so called royal family of India is identified as the largest depositor of black money in the Swiss banks. The actual amount of money that this family hold is unknown but the sources says that it ranges between $9.41 billion to $18.66 billion.
Countries involved in black money transfer
There are many countries that offer fewer taxes on money transactions and therefore making it easier for the black money holders to save their cash at minimum risk. Switzerland is the place where either you are supposed to pay less tax or simply no tax at all. The Swiss banks are advantageous in one more way that no matter what they never disclose the money transaction being made in them. The accounts details are only made known to the account holder and no one else has the access to it in any case.
Even when the Indian Government tried to take a slight action and asked the Swiss banks to provide them some information related to the total amount being saved in their banks, they simply refused and said that it's against their rule. Since banking system is a backbone of any country and Switzerland has made a very strong banking system on which their entire economy runs. So why would it want to give out the details and stop its source of income? Not only Switzerland, but Indians have many other places where they have opened their accounts such as Monaco, Cayman Islands, British Virgin Islands, Mauritius so on and so forth. Certainly there are many other places where people have and would love to park their black money, however, those areas are still unexplored.
Ways of converting the black money into white
Converting the black money into white is called money laundering and it is done by paying the due tax. It is not that simple as it may sound to people because nearly less than 1 percent of the black money holders would be willing to undertake this action unless they are legally asked to. There are people who have tried to use the short cuts through which they would not only hide their money but also to evade taxes. These primarily include transferring the money to a close relative's account (who is not eligible for income tax) and taking it back after some time or applying the cash credit and making oneself free from taxation. However, since they are named as shortcuts they can only work for a short time. In other words they are short lived.
How can Indian Government bring back the Black Money?
People of India are in dire need to get that black money back into its place. In his recent media briefing, Bhartya Janta Party's (BJP) member Ravi Shankar asked the Government to disclose the names of the people who have accounts in Swiss Banks. This urge is primarily spoken out after the Wiki leak's revealed that there are around 2000 accounts of Asians in Swiss Banks and India in particular is the main country possessing a large sum of black money in those accounts. The BJP spokesperson further added that the Government is showing reluctance in giving out the names despite Germany has already given them the data.
According to the views of legal experts, without the complete support of foreign nation banks, it is very difficult to bring back the black money. However the yoga expert Baba Ramdev has advised the Indian Government to physically inspect the visit made by the Indian locals to such banks and then takes some action. Another way through which it seems possible to get back the money is to give a final warning to the people whose money is deposited in the foreign bank to shift it to an Indian bank and hand it over to the government. In addition to this the Government should ensure those that no action will be taken against them if they go by this and if they are not willing then they will be responsible for any serious action. A specific deadline can be issued to them so that they would bring it back in that time period.
Apart from this action, good news that recently hit the newspapers is that Switzerland has signed a contract with India that would allow the Government to access the account details of Indian citizens. The act is known as Restitution of Illegal Assets Act (RIAA) and it will be workable from January 2012. This sounds beneficial not only for India as a country but also for the people of India. This way Indian Government will be able to gather a handful of information about the accounts but they will also be in a position to ask the Swiss Bank officials to freeze those accounts. The accounts will remain frozen until the account holders get to the terms with the Government within a ten year period after which the accounts will be permanently closed.
Philippines is the country which used to be known for stashing black money but it has set example by bringing it back to their nation even without setting RIAA in place. Therefore, it can be said that with strong will Indian Government can make it possible to either force the individuals to handover the black money or they can bring it back themselves with the help of Foreign authorities. The idea that needs to be communicated here is that Black money Greed is increasing day by day and this hunger will never end on its own. So the Government of India needs to jot down some ways that would help them to cope with this dreadful situation and this time some serious action needs to be taken against it.
Black Money in India
If we come to define the term black money we can say that it actually refers to the money that is being earned in black market and/or on which the tax is not paid. Though this black money trend has prevailed in every other country but this problem is quite serious in India. According to a report being published in a business magazine, India possesses more black money as compared to the rest of the world. Other countries that failed to top the list include Russia, United Kingdom, Ukraine and China.
At first, the Government of India was not willing to disclose the total amount of black money either in their country or the money transferred in foreign accounts, however, official sources estimate this amount to be around $ 1.4 trillion. Amazing isn't it? Well the Indian nation is quite wealthy in terms of their black money savings. It is very thwarting for a nation to be known as a leading black money holder because this is the money that has been illegally saved by the people into their respective accounts. Most of these personal accounts belong to corrupt politicians, high-ranked officers and industrialists. This total amount accounts for around 40% of India's Gross Domestic Products and hence one can imagine how the growth could prosper if India gets back this money.
It is a known reality that 450 million Indian people are living below the threshold of poverty and that means on average a poor person gets less than Rs. 1.25 (Indian currency) per day. So why the Government has become a silent spectator of this issue and cannot think of bringing the black money back to the country which can later be used for the prosperity of the Indians. The country has already taken enough loans from foreign countries and it has been impossible to get free from these debts since then. Beholding the taxpaying population of India, it has been seen that 31 million Indians pay annual taxes that means that only 2.5 % of the whole population is in fact paying taxes. The number of people legally responsible for tax payment is 10 times higher than this.
Ways used by people to earn black money
There are number of ways used to earn black money in India. One super way that comes at the top of the list is making money and not paying tax on it. It is where you utilize the money in a way that it cannot be taxed including sending the cash to a friends' bank or especially a foreign bank where the Indian Government cannot access easily. Black money has also been earned by using criminal ways such as payment to kidnappers, drugs and weapons business (smuggling), bribes taken on the grounds of immorality etc. some very common sources of black money are described here in some detail.
Escape from taxation: This is considered as the root source of black money as it allows the holders to hide money from the government in order to evade the taxation.
Voting scenario: This is the time when all the political members pull up their socks and get ready to earn as much black money as possible. In reality they ask for money to support the election campaigns and thus they get a chance to use less and earn more later.
Under the table income: : People approve a project and get commission on it. Such people never bother to understand the danger of approving an unethical project and they simply do it for the sake of earning black money.
Taking bribes: Anything that people think they can undertake can only become possible if they receive money from the other party. This bribe taking system is very common in India and has become an important factor in any work dealing.
On the name of social welfare: This trick of making black money in India is prevailing in the high society as the people are aware of the fact that government would definitely have no objection if they channel their cash into a welfare project.
Overnight visa offers: Using this people open an office (rental) in aside area and claim to provide work visa in few days. Once a person is convinced to their bogus ideas they ask to submit non-refundable visa registration fee and give a time limit. After they have gathered enough money, they simply close their offices and run away.
Commercial dons: In certain areas where the control of the government is not strong, people demand money from the businessmen and if they do not pay money, they do not allow the businesses to run in their area.
Smuggling: This includes all kinds of smuggling ranging from drugs and weapons to humans.
Property: Any property in the form of house or building has shown the way to create black money. People simply sale or purchase the property and hide it to evade taxes by either taking half of the money cash and rest is taken or given as a cheque.
investing in a foreign market: Many times people use this way by creating a fake company in any foreign country where usually the tax is less and then notify an investment being made in that. Afterwards the money is diverted back in no time
Reasons of holding black money
Looking at the reasons of why black money in India is common, we get to know that it is being used as an excuse to evade legal taxes. In regards to their general perspective, it can be said that they are being afraid of paying the groundless taxation. But this cannot be considered as a reason as it clearly indicated towards the manipulation to conceal cash illegally
Another reason that has been notified is the lack of trust on the ways that the government would utilize the money taken from the people on the name of taxes. People are quite unsure that the money collected from them is used for the nation's development rather it is used to fill the pockets of income tax officers and other related people. Most of the tax money is wasted in buying defense assets and is used for military purposes.
Where black money is mostly saved?
You must be wondering that if the Indian people have such great amounts then why not it shows or where the money is kept in order to hide from the government. Well they all have cleverly saved their money in foreign banks particularly the Swiss banks. It has been reported that nearly 80,000 Indians travel to Switzerland every year and most of them arrange more than 3 or 4 trips in a year. Now you can have an idea that what business dealing actually attracts the rich Indians towards Switzerland this. Swiss banks are considered the safest in the world as they do not share bank account information with anyone. Black money from across the world is saved in the Swiss banks.
When asked from the government correspondents on this issue, their statements seemed to be unsatisfactory as saying that the Government has pursued the court for this purpose but the legal officers refused to take any action against the black money holders unless each and everything is proved by the Swiss bank. Furthermore the court will only be responsible to issues orders of fine or bringing back of money on the basis of Swiss report.
Astonishingly the so called royal family of India is identified as the largest depositor of black money in the Swiss banks. The actual amount of money that this family hold is unknown but the sources says that it ranges between $9.41 billion to $18.66 billion.
Countries involved in black money transfer
There are many countries that offer fewer taxes on money transactions and therefore making it easier for the black money holders to save their cash at minimum risk. Switzerland is the place where either you are supposed to pay less tax or simply no tax at all. The Swiss banks are advantageous in one more way that no matter what they never disclose the money transaction being made in them. The accounts details are only made known to the account holder and no one else has the access to it in any case.
Even when the Indian Government tried to take a slight action and asked the Swiss banks to provide them some information related to the total amount being saved in their banks, they simply refused and said that it's against their rule. Since banking system is a backbone of any country and Switzerland has made a very strong banking system on which their entire economy runs. So why would it want to give out the details and stop its source of income? Not only Switzerland, but Indians have many other places where they have opened their accounts such as Monaco, Cayman Islands, British Virgin Islands, Mauritius so on and so forth. Certainly there are many other places where people have and would love to park their black money, however, those areas are still unexplored.
Ways of converting the black money into white
Converting the black money into white is called money laundering and it is done by paying the due tax. It is not that simple as it may sound to people because nearly less than 1 percent of the black money holders would be willing to undertake this action unless they are legally asked to. There are people who have tried to use the short cuts through which they would not only hide their money but also to evade taxes. These primarily include transferring the money to a close relative's account (who is not eligible for income tax) and taking it back after some time or applying the cash credit and making oneself free from taxation. However, since they are named as shortcuts they can only work for a short time. In other words they are short lived.
How can Indian Government bring back the Black Money?
People of India are in dire need to get that black money back into its place. In his recent media briefing, Bhartya Janta Party's (BJP) member Ravi Shankar asked the Government to disclose the names of the people who have accounts in Swiss Banks. This urge is primarily spoken out after the Wiki leak's revealed that there are around 2000 accounts of Asians in Swiss Banks and India in particular is the main country possessing a large sum of black money in those accounts. The BJP spokesperson further added that the Government is showing reluctance in giving out the names despite Germany has already given them the data.
According to the views of legal experts, without the complete support of foreign nation banks, it is very difficult to bring back the black money. However the yoga expert Baba Ramdev has advised the Indian Government to physically inspect the visit made by the Indian locals to such banks and then takes some action. Another way through which it seems possible to get back the money is to give a final warning to the people whose money is deposited in the foreign bank to shift it to an Indian bank and hand it over to the government. In addition to this the Government should ensure those that no action will be taken against them if they go by this and if they are not willing then they will be responsible for any serious action. A specific deadline can be issued to them so that they would bring it back in that time period.
Apart from this action, good news that recently hit the newspapers is that Switzerland has signed a contract with India that would allow the Government to access the account details of Indian citizens. The act is known as Restitution of Illegal Assets Act (RIAA) and it will be workable from January 2012. This sounds beneficial not only for India as a country but also for the people of India. This way Indian Government will be able to gather a handful of information about the accounts but they will also be in a position to ask the Swiss Bank officials to freeze those accounts. The accounts will remain frozen until the account holders get to the terms with the Government within a ten year period after which the accounts will be permanently closed.
Philippines is the country which used to be known for stashing black money but it has set example by bringing it back to their nation even without setting RIAA in place. Therefore, it can be said that with strong will Indian Government can make it possible to either force the individuals to handover the black money or they can bring it back themselves with the help of Foreign authorities. The idea that needs to be communicated here is that Black money Greed is increasing day by day and this hunger will never end on its own. So the Government of India needs to jot down some ways that would help them to cope with this dreadful situation and this time some serious action needs to be taken against it.
Post a Comment