Black money

Black Money

What Is Black Money

Black money, which is called ‘ Kala Dhan’ in Hindi, is practically hidden from the eyes of the Income Tax Department. This money is not accounted for in the government figures. This is the unaccounted wealth of big businessmen, politicians, officials, mafia and hawala traders.

Black money is a hindrance in the development of any economy because it is fully capable of giving birth to a parallel economy. The income on which a person does not pay proper income tax, that amount becomes black money of the person. In this way, black money can be obtained from both legal and illegal sources of income. Since most of the legitimate sources of income are known to the state. Therefore, income tax is taken on them, but it is difficult to keep an account of the income earned from illegal sources and to tax it.


Therefore, the main source of black money is the sources of illegal income. To hide this income, people use such countries, where the income is tax free. Examples of such countries are Singapore, Mauritius, Germany including Switzerland etc. There is a constant condemnation of Indians hiding black money in Swiss banks. In such a situation, there is a need for all of us countrymen to think seriously on these lines of social worker Anna Hazare- “Is this democracy. Everyone has come together to make money. I will consider myself lucky if I kill for my society, my countrymen.

The International Monetary Fund h prepared a report related to black money in the context of India, in which it has been said that the problem of black money in India is the result of illegal activities within the country and outside the country. This report further states that India is important as an emerging economic power of Asia, but due to black money, illegal activities inside and outside the country, drug trade, fraud, organized crime, human trafficking, corruption Many types of economic and political threats like counterfeit money and illegal money recovery and the problem of black money will have to be faced in elections.

According to a report released by Global Financial Integrity, an amount of $343.04 billion was remitted from India as black money during the last decade. Countries like China, Russia, Mexico and Malaysia are ahead of India in this list. According to this research and advocacy organization based in Washington DC, in the year 2011, about $ 950 billion black money was sent by developing countries to foreign countries. In this list, after Russia and China, India ranks third in black money remittances amounting to $ 84.93 billion.

Apart from Switzerland and Germany, there are 69 such places in the world, where there is an easy facility to deposit black money. Of these, Switzerland is the first choice of all countries, where the law regarding keeping the names of account holders confidential is strictly followed. Even in the books of banks, not writing the name of the account holder, only the code number is written. Black money deposited in foreign banks does not only include tax evasion money, but also includes black money earned from corruption.

The United Nations has passed a resolution in the year 2003, which is signed by 140 countries including India, for the purpose of bringing back the black money deposited in foreign countries of the world’s big politicians, bureaucrats, brokers, businessmen. By implementing this resolution, 126 countries have also started collecting black money. India has signed this resolution in the year 2005.

Sources of Black Money

According to the law of Switzerland, the withdrawal of money deposited abroad cannot be processed without the signing of the resolution. The Parliamentary Committee of the Government of Switzerland has approved the agreement between India and Switzerland, which is in the interest of India. After the economic slowdown in the world, the process of bringing back the black money deposited abroad was started by all the countries of the world.

It was only after the 9/11 attacks by Osama-Bin-Laden on America that it was revealed that bin Laden also deposited his money in banks that kept the accounts secret, as a result the names of the account holders who deposited black money by Germany Pressure was put on Switzerland to tell. After that Italy, France, America, India and Britain also started pressurizing Switzerland to reveal the names of black money hoarders. Under pressure from the Barack Obama government of America, the UBA bank there not only released a list of the names of 17,000 Americans who deposited black money, but it also returned the black money amounting to $ 78 million. Rudolph Elmer, a retired official from the same bank, also claimed to have handed over a list of 2,000 Indian account holders to WikiLeaks editor Julian Assange. In such a situation, the hope of returning black money in India increases even more.

According to an estimate, the country’s black money amounting to ₹ 35 lakh crore is deposited in foreign banks, of which ₹ 3,000 crore is suspected to be deposited in 782 accounts of HSBC Bank in Geneva. Due to the fear of disclosure of the names of these account holders of HSBC Bank by the Income Tax Department and the fear of losing the deposited black money, money stashed in foreign banks by Indians along with other countries of the world is being brought back secretly. .

According to the Swiss National Bank, the deposits of Indians in Swiss banks were ₹ 14,000 crore in the year 2011, which has come down to ₹ 9,000 crore in the year 2012. So far many efforts have been made by the Government of India to bring the black money of the country to the fore. With the attainment of independence, Income Tax Inquiry Commission was constituted, through which tax recovery of ` 30 crore became possible. Large amount of tax was also collected through Voluntary Income Disclosure Scheme. The Resurgent India brand has also played an important role in tax collection.

There was also a loud voice raised by Baba Ramdev to bring back the black money deposited by Indians in foreign countries on a large scale. The Central Government has also been pulled up several times by the Supreme Court for not making public the details of accounts linked to black money. After the formation of the BJP government at the Center in the year 2014, a Special Investigation Team (SIT) was formed as per the directions of the Supreme Court to control black money. Justice MB Shah was made its chairman. With the formation of Special Investigation Team, new hope has been raised for the return of black money deposited in foreign banks.

The investigative agency working under the Central Board of Direct Taxes (CBDT) has said that the Swiss bank has received a list of 100 Indians of black money, although their names have not been made public yet. As a result of criticism and pressure from all countries, Swiss banks have decided to change their rules to deposit only those assets whose tax has been paid. Along with this, to assist foreign countries in the investigation of black money kept in Swiss banks, the government of Switzerland has also prepared a list of suspicious Indians who have made black deposits in Swiss banks and they will soon get the details from the Indian government. Will share Here recently, the Government of India has given information to the Supreme Court about the names of 18 persons who have an account with the Liechtenstein Bank in Germany and the Government of India was not aware of this. Along with this, the present BJP government at the Center has also submitted a list of 627 Indian account holders of Geneva-based HSBC Bank to the Supreme Court, out of which 250 people have admitted to having bank accounts abroad and 427 people have also been identified. But their names have not been disclosed yet.

Analysis of the Recent steps by Government

In recent times, many important steps have been taken by the present Modi government in the direction of prevention and eradication of black money.

In which Acts related to Benami transactions, Demonetization, Goods and Services Tax (GST), Electoral Bonds etc. are included.

Benami Transaction Prohibition Amendment Act, 2016 – This Act is an amended form of the earlier Benami Transactions (Prohibition) Act, 1988, which is effective from November 1, 2016 for the prevention of benami transactions in the country. The main objective of the Act is to place benami property in the financial system, to confiscate benami properties, to punish those involved in it. A provision of 7 years imprisonment and fine has also been made for the violator of the Act. Benami property is one whose price has been paid by someone else but the property is in the name of another person.

Demonetisation The Prime Minister of India announced on November 8, 2016 that the 500 and 1000 rupee (old) notes will no longer be legal tender (legal tender) from midnight tonight. Due to this move of the government, a large amount of black money was seized in the country and the circulation of fake notes came down.


• Although the government had implemented the Black Money and Imposition of Tax Act 2015 before this move, the main objective of which was to disclose foreign black money within three months by paying 60% tax. In addition, under the ‘Income Declaration Scheme’ implemented in early 2016, citizens were allowed to declare their undisclosed income and pay up to 45% of their declared income in the form of tax, surcharge and penalty. .

Swachh Dhan Abhiyan: Operation Clean Money was launched by the Income Tax Department for e-verification of large amounts of cash deposits made till December 31, 2016. The government used data analytics for this to identify individuals whose cash deposits do not match their income tax profile.

Goods and Services Tax (GST) GST was implemented by the Central Government from July 1, 2017 in the direction of reforming the indirect tax system. This is likely to improve tax administration and widen the tax base. Apart from this, the chances of tax evasion will also be reduced.

Electoral Bonds: In order to clean up political funding and check the use of black money in elections, Finance Minister Arun Jaitley released the Framework for Electoral Bonds in January 2017. These bonds can be purchased from certain identified branches of State Bank of India and will be used for making donations to political parties. It is hoped that this will reduce corruption in the form of election donations. These bonds will be available in denominations of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh and Rs 1 crore and will not bear the name of the donor. Electoral Bonds can be encashed only within the authorized 15 days and the buyer of the Bonds will have to inform the SBI about the KYC.

The problem of black money is a serious problem for the country, although the government has taken many important steps mentioned above to get rid of this problem and it is likely to be taken further, however, the government needs to do more and has been taken. There is a need for correct and effective implementation of steps so that this problem can be progressively reduced and finally eliminated.

Leave a Comment