Black Money Essay with Outlines
Black Money Essay is presented over here with outlines. Here we have provided a complete description for Black Money Essay along with its impacts, causes, reasons, sources of black money and remedies for black money. Black money does not just weaken the nation’s economy however it also widens the economic gap by making the rich richer and the less fortunate poorer. A significant amount of black currency also affects a nation’s social fabric and public agencies’ efficiency. Black money is earned through fraud.
Black Money Essay Outlines
1. A big hurdle to the speedy development of our economy. Black money is obstructing the speedy development of our economy and is posing a threat to its stability.
2. Generation of black money. (a) sale of fixed assets; (b) sale of scrap; (c) sale of raw materials; (d) sale of industrial manufacturing licenses; (e) over-invoicing purchase bills; (f) smuggling foreign items into the country; (g) placing on the payrolls of a company relatives who are not tax-payers.
3. “Law of motion” governing black money. Returns on white money are poor and slow but the returns on black money are very high and fast.
4. Steps taken by the Government to check the generation of black money. (a) Physical verification of the assets being sold; (b) proper record for the sale of scrap; (c) Government approval for transfer of licenses and delicensing of most of the industries; (d) payments for purchases and expenses over Rs.2,500 not allowed in cash; (e) acquisition of property transacted below the market value; (f) anti-smuggling laws; (g) voluntary disclosure of black money; (h) demonetization of thousand rupee notes; (i) lifting of the ban on company donations to political parties.
5. Inefficacy of the steps taken, suggestions. (a) nationalization and reduction of excise and custom duties; (b) simplification of tax structure; (c) removal of price control; (d) indexation of income tax rates; (e) relaxation in rent control laws; (f) vigil on corrupt politicians and officials.
10 Lines on Black Money Essay
1.) Black Money is the cash hidden from tax authorities.
2.) The money on which taxpayers don’t have to pay taxes is considered black money.
3.) Black money is not an economic boon for a country’s growth.
4.) India ranks among the top countries with black money in foreign accounts.
5) Bribes and corruption are the primary sources of black cash worldwide.
6) Politicians, businessmen and wealthy individuals, for example, are all involved in the movement of black currency.
7.) Black money gives benefits to wealthy people but negatively impacts those who are poor.
8.) The government takes various measures to stop black money since they are illegal.
9) Demonetization is a positive move towards regulating black money.
10) Tax laws, elections, excise rates, and so on are the main reasons for black money.
Black Money Essay with Outlines
Black Money Essay in Short
Let’s glance at the Black money essay, which contains an overview of the significance and sources and how it affects the nation’s financial condition.
In India as with other countries, all citizens who earn over the minimum wage have to pay taxes on behalf of the authorities. The tax must be paid and should also be limited to documents about transactions in the monetary sector. It is a standard that all citizens must adhere to; however, some have found loopholes within the rules. They also attempt to deceive authorities and use illicit black transactions. The people who avoid taxes are the most affluent high-ranking officials, such as business and political leaders, however, many individuals attempt to dodge taxes like smugglers and criminals. Any money obtained through illicit transactions is known as black money. They try to convert them into legitimate earnings through money laundering.
The consequences of this type of behaviour are dire since it directly impacts the financial and economic health of the nation. There is no improvement or growth, so those who live their lives by earning honest money suffer the consequence. Combating black money must be a collective effort and only which will eliminate this problem.
Long Black Money Essay
In this article on black money, numerous crucial points are covered, such as the adverse economic effects, benefits and disadvantages, and how to handle this issue. In every country, it is essential to have laws that regulate and promote the growth of the population as well as the development of the country. One of these laws can be found in the direction of taxation. In India, a specific amount of income has been exempted from tax, which is dependent on income and expenditures. These should be considered and documented, even insurance, loans, etc. It is the proper method to follow.
Anything that’s been done unconstitutionally or illegally and prevents the cash without making payments to the government poses an obstacle to our nation’s progress. For example, if you buy from a shop and pay with cash, but don’t receive a receipt from the store because the money you earn from the store is not recorded and is considered to be black money because there is no tax paid for sales that are not registered. Black money is often cash-operated. There are numerous nations and territories around the world where taxes are not enforced, such as those in the United Arab Emirates, Monaco, Bermuda, Bahrain, Brunei, Kuwait, Oman and Qatar. They reside in tax-free territory, and evidently, it’s effective because the state rises in the ranks of making progress economically.
It is a well-recognized fact that there exists in Pakistan a parallel economy based entirely on black money transactions. Black money, also described as tainted money, has seeped into every walk of life and is posing a great threat to the stability of our real economy. The most unfortunate aspect is that it has come to be accepted as a normal fact of life. People hardly feel any qualms of conscience while dealing with it. In their jaundiced eyes, AU the black appears to be bright and beautiful. Our businessmen employ very ingenious methods to generate black money, since it is black money which is the backbone of their business activities.
Large amounts of black money can be generated through the sale of fixed assets and scrap. Sometimes influential firms obtain quotas or import licenses in excess of their actual requirements and sell them at cash premiums. Industrial manufacturing licenses are similarly obtained through influence and sold to a second party at an enhanced value. Purchase bills are over invoiced or dummy bills are prepared. Large-scale smuggling of gold and various luxury items are important sources of black money. Smuggling of gold is no longer as profitable as it used to be but luxury items still continue to be the craze of the people.
Smuggling deals entirely in black money and the money thus earned is ploughed back into smuggling or similar illegal trades. Sometimes, relatives whose income is not taxable are kept on the payrolls of a be company; they are paid their salary which is taken back in the form of black money. If any of these means are rendered ineffective by the Government, other equally clever means are soon discovered and the trade dealing in tainted money grows on. The laws governing the movements of black money exhibit peculiar trends. Returns on white money investments are discouragingly poor and slow. But black money multiplies at a fantastic rate.
Returns on black money investments are often to the order of 200 to 300 percent. Since money generated is re-invested in such activities as hoarding and smuggling, it fetches still higher returns. Once black money is converted into black wealth, it is very difficult to track it down. Since the government is quite conscious of the menace of black money, it has been from time to time, taking steps to prevent its generation. In January 1976 the Government imposed a statutory obligation on the management to carry out physical verification of its assets to the satisfaction of the auditors to ensure that no black money is created through the sale of fixed assets. The management is also obliged to maintain a proper record of the sale of scrap. Licenses are now issued only to actual users and they have to certify that they themselves consumed the raw materials imported by them.
Most of the industries have been delicensed and in other cases, licenses can be transferred only with the prior approval of the Government. Payments for purchases and expenses over Rs. 2,500 are not allowed in cash. The Government has now the right of acquiring any immovable property by paying 15 per cent above the value mentioned in the instrument of transfer if it is suspected that the property has been transacted below the market 10 value. Huge amounts of money were unearthed through the Voluntary Disclosure Scheme. Thousand-rupee notes were demonetized. Anti-smuggling laws were made more stringent. In 1985, a ban on company donations to political parties was also lifted. Thus legislative measures.
But the ingenuity and astuteness of the dealers in black money is just marvelous and they succeed in punching fresh loopholes. The Government’s thrust has so far been in the wrong direction. The economic measures that have been taken are primarily aimed at unearthing black money. Something more meaningful and effective should be done to prevent the generation of black money. The remedial measures suggested by the National Institute of Public Finance and Policy include rationalization and reduction of excise and custom duties which encourage smuggling and simplification of the tax structure. The institute has also suggested removal of price controls, indexation of the income-tax rates to neutralize the effect of inflation and relaxation in rent control laws.
These measures, if sincerely implemented, should prove quite effective. But the Government should also keep a strict vigil on the corrupt politicians and officials. The widespread impression that in Pakistan one can do anything and get away with it must be removed. This can be done only if corruption is weeded out at the top.(Tainted – polluted; Ingenious – clever, Evasion – the act of evading)
Advantages of Black Money
Like everything else, this illicit activity offers certain benefits. Although it was in the Soviet Union where black money was considered illegal, it was mostly on the underground black market. But it proved very beneficial in the oppressive country. In times of economic hardship, the country was in due to economic decline then the government turned on the black market and utilized legal means to help make the country an economic contender market.
Disadvantages of Black Money
Since these transactions are not recorded, they remain unnoticed, and the country’s corruption level increases.
As the rate of corruption grows, the severity of all crimes can be seen to rise, such as terrorist acts, gunrunning, human trafficking, the sale of alcohol and other drugs that are not permitted or any other commodity that can be harmful, also increase.
- The law enforcement system weakens, and lawmakers too, just like police officers are victims of a corrupt system.
- Without stricter laws, fraud and the black money market will continue increasing.
- Leaks in the financial system occur and the government suffers losses in revenue.
- Financial loss is a way to reduce the overestimation of the country’s GDP.
- In the event of such losses at the micro-levels, macroeconomics suffers and fluctuates continuously.
Impacts of Black Money
Black money doesn’t only negatively impact the economic situation of the country, as well as having adverse social effects. It causes economic inequality within the country, which is the cause of social inequalities. It is the reason that the wealthy are becoming richer while the poor are getting less. Social inequality causes discontent among people and can lead to criminal acts like robbery, corruption, and many more. Tax evasion is also a sign that the money which could have been used for development and growth did not get to the government. If the government doesn’t have enough revenue, it will be unable to undertake new projects to help in the development of the country as well as the lifting of the poor. Countries where people make their taxes a priority are more prosperous than the ones with large amounts of black currency.
Problems with Black Money
The International Monetary Fund has prepared an analysis of black money within India. In the report, it is stated that the problem with the black market in India is caused by illicit activities within the country as well as outside of the country.
The report further declares that India is a critical emerging economic power in Asia. However, it is not because of illicit activities, black money both inside and outside of India, drugs trafficking and fraud, organized crime human trafficking, corruption, as well as other types of political and economic threats that the issue of black money is going to have to be addressed in the coming elections.
According to a study released in a report by Global Financial Integrity, $343.04 billion was transferred from India in the form of black money over the past decade. Countries such as China, Russia, Mexico, and Malaysia outnumber India in this ranking.
According to this study and advocacy group based in Washington DC, in 2011, around $ 950 billion of black money was transferred from developing countries to other countries. In this list, following Russia and China, India has been the third country in the remittances of black currency totalling $84.93 billion.
Sources of Black Money
The most popular source of black money is via the underground or black market economy, including drug trafficking, weapons trading as well as prostitution and terrorism. Selling stolen or counterfeit products, such as credit cards, or copies of copyrighted products like music recordings and software.
There are several sources of black cash in the country. Illicit income earned from selling products is among these sources since the prices are above the government. Controlled costs made from selling products in large quantities consistently exceed the government. Restrictions and quotas apply to these items.
Black money results from man’s desire to earn more money, live a lavish lifestyle and build tall buildings and ferocity. The standard of living in Western countries is significantly higher. Wealthy Bangladeshis and middle-income-generating individuals are determined to meet their incomes, and, as a result, they try to improve their earnings regardless of the method.
It is easy to satisfy human desires, yet there’s no way to satisfy their lust. Everybody wants to be prosperous and happy with a hook or the hook. However, the tax system also doesn’t favour businessmen or the corporate sector.
Political instability, elections mercy in dealing with offenders, and corrupt govt. Officials perpetuate the factors that create black money. People of all ages do not know about income tax or the laws and procedures for avoiding income tax. However, those who are wealthy and intelligent taxpayers are well-equipped to identify loopholes via the experts/experts in income tax who are well-paid by the government. The government. Officials, accountants, govt. Officials, CAs, businessmen, and criminals join forces to devise effective ways to avoid taxes.
The demonetization of the currency was a good decision for our government; however, there is no doubt that we as a country have a long way to go before we are entirely free of corruption. It is essential to implement stronger laws. Anyone who attempts to bribe should be punished or detained. It is necessary to have strict control and elimination of loopholes in place that facilitate unlawful actions. A second attempt to eradicate this issue should be taken, and laws changed to ensure that the country’s growth is not affected. Citizens must be vigilant and cooperative and notify authorities of any such actions. A solution to this issue is sure to help to bring balance to be social and financial inequality.
Ways to Tackle The Black Money Problem
The best approach to deal with this issue is to work with law enforcement and the government. It should be teamwork between the citizens and legislators. The government of the United States has taken a significant step towards curbing the circulation of black money. Demonetization was enacted, removing a specific denomination currency of its value, deemed illegal. Thus, all the illicit piled-up cash no longer had any value and needed to be exchanged and returned to the RBI, which serves as The Reserve Bank Of India or be thrown away all together.
FAQs on Black Money Essay
What is meant by black money?
Black money refers to all money made through illegal activities and other income that is not tax-deductible.
What are the causes of black money?
Lack of supplies, high tax rate, and Smuggling has been identified as the reasons for black money.
How to control black money?
Sexual offences, Smuggling, embezzlement and corruption, illegal mining, trafficking of contraband drugs and other illicit activities are all familiar sources of black cash.
What are the types of black money?
Legislative Framework for Dealing with Black Money:
- Prevention of Corruption Act, 1988.
- Benami Transactions Prohibition Act, 1988.
- Prevention of Money Laundering Act, 2002.
- The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015.
- Lokpal and Lokayukta Act.
What are the types of black money?
It could be derived from the following two categories of general interest:
Illegal Activities: Money generated through unlawful activities isn’t declared to tax authorities and, therefore, is considered black.
Legal, but not reported The second type of category is the income earned from legal activities that aren’t reported to tax authorities.
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