Converting black money to white
With the sudden governmental actions taken to curb black money circulation, many big shots of the country are facing the pressures of converting all illegally acquired wealth to white cash. Before proceeding further, it is important to understand what exactly black money is. Black money in the Indian economy refers to the money that is earned in the black market, that is, the money on which the individual does not pay taxes to the government. This is illegal and punishable under the law. This is perhaps why the black money recipients tend to hide such facts and spend this money in cash instead of other forms of banking transactions.
Though not advisable, there are certain loopholes in our economic system that makes it possible for black money to be converted to white money. These are perhaps the opportunities that black money recipients might use currently in order to overcome the government regulations against illegal money. Some commonly used practices include,
Charity donations
With excess money to be converted from black to white in hand, most people would prefer donating lavishly to orphanages, old age homes and other charitable organizations. The amount is generally paid in cash form, without any receipt requirement. Some organizations may also take direct deposits to their organizations account as well. This helps the person clear off black money as well earn praises from society for helping the needy.
Give it to the needy
This is perhaps the easiest way to get rid of black money. Passing on some money to someone in need or someone who is financially not sound enough can help the person live a better life and the donating person some peace of mind.
Invest in expensive valuable
With lots of hard cash in hand, it is common for people to buy high value goods to convert the black money to white. This may include buying a new property, land or flat, a new car or any other expensive good. The buyer generally requests for a back dated bill from the seller to cover up the ploy.
Set up a new start up
This is the best time to give wings to new ideas in the form of new business ventures. Setting a new company requires ample investments. This allows black money to be utilized fruitfully and establish a startup company to avoid the eyes of the tax department.
Loan out to others on low interest rates
Another easy way to convert black money to white is passing on some amount as a loan to others while charging a low interest rate of may be 1-2 %. This offer is lucrative enough for others to take up the loan and a way out for black money recipients during this period of crisis.
Invest into various sectors of finance
One can easily invest large amounts on various sectors of finance. They can buy new insurance policies of higher values and invest in mutual funds. This investment makes it possible for black money to be utilized profitably.
Advance payments
Businessmen can pass on large amounts of black money in the form of advance salary payments to employees. Appraisals and bonus paid to employees keep the staff happy and satisfied while the employer can get away without paying taxes on large illegally acquired cash.
Cough up taxes
The recipient can pay up taxes on some portions of the acquired black money in order to avoid the eyes of the Income Tax department in terms of the rest of the money, which can be an atrocious amount for the government officials.
Fill up on fuel
With fuel stations taking old notes and cars always requiring fuel, black money recipients can stack up on fuel like petrol and diesel in bulk quantities. Though this is a risky option, with the law over their heads, black money recipients are more likely to take up the risk in the current situation.
Income as Agriculture Income
Another popular way of converting black money to white is by showing the income amount as agriculture income. This is possible only when the person possesses any land. If not, then the primary task is to acquire large areas of land. This land is then used for agriculture purposes like small scale plantations, gardening, farming and setting up nurseries.
Cash Income from Profession
One of the most popular options of converting black money to white is simply showing the cash income as payment from profession. This can be from professional income from tuition to students, and professional fees or commission for education related issues.
Stacking on liquor
Big businessmen can plan of stacking large quantities of highly expensive liquor and other alcoholic drinks. This can be shown as required for personal parties and other events. This helps spend the black money in the form of white cash
Lavish shopping soiree
Big large amounts of liquid cash in hand, though black money, people can easily spend up on lavish shopping trips to the malls. Purchasing expensive shoes, clothes, household items, accessories, make up items and other home products can help get rid of illegal funds.
Expensive holidays
One can relax and unwind with family and friends on a vacation to exotic locations. The holiday reservations can be paid using the black money cash fund. This way one gets to enjoy, have a nice time and be stress-free in terms of tax-free money.
These are probably only few of the possible ways to convert black money to white. Black money recipients would probably be thinking of several other ways to overcome government regulations and get away with illegal money.
Disclaimer –
We don’t recommend readers to follow any of these methods for black money conversion. This article is just for exposing loopholes of our system. So, that RBI and the government can take appropriate action by formulating strict rules to remove black money from India. We are against black money and black money generation ideas.
If we have missed any other methods which people use to convert their black money into white money, we’ll request you to share it in comment sec.
