Wrong Way by which Black Money Holders are trying to convert their Black Money into New Currency

All of Black money Holder are Worried to Convert their Black Money into the New Currency after Demonetization adopting the wrong way.

Following are some of the Wrong ways which People are following to Exchange their Black money and get New Currency Notes after Bearing Some Cost which is obviously less than 200% Penalty.

1) Donation to a Temple: Yes, Now is the Time to Donate. People are submitting their Black Money into Temple ‘hundis’ or donation boxes. Temple Management will show this as Anonymous Donation and exchange it for New Currency notes, keep a Commission for this Service and will return most of it to the Owner.

As per Economic Times Report Dated 20.11.2016, Donations in Tirupati Temple in just 10 days, commencing from November 9, an amount of Rs 30.36 crore was received in the hundi, a figure which was Rs 8 crore more than the same period last year. Mumbai’s Siddhivinayak has received twice the usual amount in anonymous donations in the week since demonetization.

Sec 115BC of the Income Tax Act, 1961 attracts Tax @30% in the hands of Charitable Institution in case the Anonymous Donation Exceeds Rs.1 lakh. So keeping in mind the Tax Liability in the hands of Charitable Institution, they may demand Service Commission ranging between 30-35% which is obviously less than the Penalty Burden.

2) Pay Advance Salaries: Yes, In Case you are an Employer then you may pay Advance Salaries to your Employees ranging between 3-8 months. The Modus Operandi adopted in this case is to give employees Salary upto the Limit of Rs.2.5 lakhs i.e. the Limit above which the Deposits would be Examined by the Government.

Employer may pay Advance Salaries by Opening New Salaries Account and Keep the Cheque books and Debit Cards with Company/Firm itself and by this way they will be able to withdraw the New Currency before 30th Dec without attracting the attention of the Income Tax Department.

3) Finding a Jan Dhan Account holder: The demonetization of high value currency notes by the Modi government has suddenly made ‘money-changers’ and ‘entry-operators’, active in managing black money. Money changers are reported to be using zero balance ‘Jan Dhan’ accounts, mostly held by BPL families, as a vehicle to convert old currency by depositing Rs 500 and Rs 1,000 notes up to Rs 2.5 lakhs in these accounts.

While the government says it will monitor unusual activity in Jan Dhan accounts, it will be easy for a poor person to say the small amount was his life saving at home.

4) Purchasing of Gold against a back Dated Invoice: Gold prices shot up because many black money hoarders rushed to jewellery shops as soon as prime minister Narendra Modi made the demonetisation announcement on 8 November. The Modus Operandi adopted in this case is writing a back dated Invoice i.e. before the Ban and Jewellers charged anywhere between 20 and 65 percent above the going rate by buyers snapping up the precious metal with old notes.

5) Buying and Cancelling Train Tickets: People were paying agents for expensive first-class train tickets with old notes and then cancelling them later to get reimbursed in new notes, all in order to get around the tax man.

The numbers of expensive first AC tickets booked per day have increased by many times. As a result, the railways have said refunds won’t be in cash. But since these bookings are being made through travel agents, even refunds through electronic transfers mean the travel agent will be able to return large sums in new currency notes.

6) Making Costly Purchases: Wealthy Indians rushed to make costly purchases with unaccounted cash soon after Modi’s announcement on November 8. Several luxury retailers stocking brands like Rolex and Dior sent emails to clients stating their stores would be open until midnight that day, The Economic Times report.

The daily said a leading global fashion brand store in Delhi remained open all night immediately after the move was announced, selling merchandise worth more than $150,000 in less than.

7) Gifts from Relatives Another common trick is to show the cash as gift received from relatives. Gifts from certain specified lineal relatives are not taxable if the recipient is an adult. However, the amount shown as gift should be reasonable and commensurate with the overall economic status of the household. A family with a monthly income of Rs 1 lakh may get cash gifts of about Rs 40,000-50,000 in a year.

8) Using political parties. Since political parties can collect donations of Rs 20,000 or less without having to reveal who donated the money, let alone their income tax PAN number, they will have the easiest time with demonetisation. A political party can say it collected this amount of cash in old currency donations before demonetisation and demand that it be changed into new currency by 30 December. That also raises the fear that political parties could actually use this method to launder black money of individuals within and without their party.

9) Find a Money Mule: Black Money hoarders are reportedly using their staff and Relatives to stash Rs. 2.5 lakhs in their Accounts. Since the Government has said it will not investigate deposit less than 2.5Lacs; this is Relatively Easy way to convert the Currency.

DISCLAIMER: I don’t recommend readers to follow any of these steps. I just want them to be aware regarding these false practices.