Black Money – Generation and avoidation
Black money means to create funds by non payment of income taxes by way of : –
1. filing income tax return by showing low income .
2. Money earned through bribes and corruption by government employees,officer and politicians.
3. Commission earned through arranging government deals and purchase.
Government must focuses an undisclosed income of businessman rather than illegal money accumulated .
If we see some of the recent incidents of income tax searched would reveal that corrupt Government official have accumulated Black money,Examples of few are:
1. The Income Tax Department has recently search in November 2014 the residence of Noida Authority’s engineer-in-chief Yadav Singh and recovered over 10 crore in cash and jewellery worth 100 crore. In totality, unaccounted immovable property of nearly 1000 crore found.
2. Income tax search in Mumbai at Bhai Thakur’s (Politician) office and home in August 2014. The cash found in search in India 13,500 crore.
Cash deposit more than 10 lac Rupees in a single bank in a financial year is covered by AIR (Annual Information Report) to be given by Bank to Income Tax Department. This is a self generated report submitted by Bank software.So it is very typical to manage Rs. 5 Crore cash by opening 50 Bank account and depositing less than Rs. 10 Lac per account.so such black money kept by the people in form of followings : –
1. Cash at home or other form of giving on interest in market.
2. Immoveable Property by different names
3. Foreign Bank Account like swiss bank
Generation of Black money can be avoid by following ways: –
1. Lower taxation in india can reduces generation of black money in india . At Present the tax Rates in india is very hight other than least corrupted country like singapore etc.
2. De-monetisation of 500 & 1,000 Rupee Notes to help prevent Indian black money.
3. Higher value Rupee notes should be its expiry dates so that 1,000 & 500 which remain in the market for only a Limited Period .After that period only bank have authority to encash these notes.
4. Amnesty – Amnesty programmes have been proposed to encourage voluntary disclosure by tax evaders. These voluntary schemes have been criticized on the grounds that they provide a premium on dishonesty.
Voluntary Disclosure of Income Scheme (VDIS)
Government of India, The Central Board of Direct Taxes launched on June 18, 1997 the Voluntary Disclosure of Income Scheme (VDIS) which provides income-tax defaulters an opportunity to disclose their income at the prevailing tax rates under the umbrella protection of immunity from major laws relating to economic offences.
Those opting for the VDIS would be granted immunity from prosecution under Foreign Exchange Regulation Act, Income Tax Act, Wealth Tax Act and Companies Act.
The scheme was effective from July 1, 1997 to December 31, 1997. Those eligible under the scheme include persons who have failed to furnish I-T returns for any year or those who have part-disclosed their income in returns or have completely escaped assessment.
This scheme covers all persons, i.e. corporate or non-corporate. The tax payable on the disclosed income will be 30% in the case of individuals and 35% in the case of other declarants, viz, corporates and firms.
5. Politicians should file a return of their assets and incomes which should be subjected to scrutiny by a special agency created for this purpose.
6. Registration fees in relation to property and other real estate should be lowered.
Special Investigating Team on Black Money
The Modi Government formed an Special Investigating Team on its first day of rule.
Herve Falciani said to NDTV that “India has less than 1% of the information from the original data. I am helping other countries and I am keen to help India.”