<p style=”text-align: justify;”>Prime Minister Narendra Modi’s unexpected announcement to discontinue tender of Rs 500 and Rs 1000 have left the commoners in a huge soup. whereas this is often a commendable move to check black money integration in Indian economy, the common masses are finding it difficult to face in the queue and exchange old notes at bank.
Not only so, the old notes, that were supposed to work at hospitals, railways and petrol pumps are usually being refused by the authority due to the lack of change.
While the commotion continues, hoarders of black money are finding innovative ways that to bypass the same old banking transactions and using the old currency notes. People are inventing ingenious ways that to try and hide their money from the tax inspector.
What is Black money –
Black money is tax evaded income. It may earned through both legal and illegal means. The majority of the black money is that the income received in cash not accounted in books and not discovered to the govt. for tax purposes.
How does the black money get generated?
An officer in government service,Mr. Blackappa, demands Rs.1 lakh from Mr.Shortcut for doing a favour (say to approve the building sanction plan). Mr. shortcut hands over Rs.1 lakh to the officer in cash (no one takes a bribe in cheque/demand draft!). As this money hands over in cash hence this money won’t accounted within the books of Blackappa and he won’t pay any taxes on it (it may be good to legalize bribe and collect taxes on it) Count # 1 – Rs.1,00,000 black money generated.
Sale of property –
Mr. Greedy buys a property from Mr. Cheat for a complete sale value of Rs.50 Lakhs. He takes Rs.35 Lakhs in cheque/DD and the balance in cash. He pays taxation on Rs.35 Lakhs, and the seller pays capital gain tax considering the worth as Rs.35 Lakhs. Count # 2 – Rs.15,00,000 black money is generated.
Sale of goods/services without invoice –
you purchase a sofa set from a furnishings dealer. what’s the worth? The shopkeeper will tell “the price is Rs.60000 and taxes at 14.5%”. Any discount? the answer from him will be “Yes madam,Hence i can give it at Rs.58,000 without the bill. If you wish, I will write on a piece of paper or on a quotation” Count # 3 – Rs.58,000 black money generated.
Accounting for fictitious expenses –
A businessman tells his accountant “I can’t pay so much tax. Do one thing, reduce the taxes” The accountant accommodates by booking fictitious expenses. If the businessman declares a profit of Rs.15 Lakhs against the particular profit of Rs.25 Lakhs, black money of Rs.10 lakhs is created. Count # 4 – Rs.10 Lakhs black money generated.
There are Many ways from which black money generate.
Now the big question
How To Convert Black Money to White Money:-
Loans at low interest:-
Many hoarders have suddenly turned Samaritans and they are visiting slums and villages asking people if they need cash. Hence they’re ready to loan out Rs 2 lakh at 1% interest. Some are also giving six months’ free interest. Since the only condition that prevails is acceptive old notes of 500 and 1000. The loan takers are convinced that they can exchange old notes anytime they like.
Buying Rs 100 notes:-
It has been reported at several places that agents selling a hundred rupee notes in exchange of old notes and also a small fee have started mushrooming. Black money hoarder are exchanging plenty of old notes in this process.
People were paying agents for expensive first-class train tickets with old bills then cancelling them later to get reimbursed in new notes, all in order to get around the tax man. The representative for Indian Railways, Anil Kumar Saxena said that, ticket purchases for firstclass, air-conditioned compartments, the most expensive class, had surged.
“We typically sell about 2,000 tickets each day,” he said. Since the day after the demonetization measures were proclaim, that rose to 27,000, Saxena added.
Even small cities like Indore, Siliguri, Asansol, Merut have show train ticket sales reaching upto Rs 5 lakhs a day.
Investing in gold:-
Jewellers stayed open into the early hours of Wednesday. In Mumbai it had estimated that about 250 kg of gold, worth an calculable Rs 750 lakh rupees at spot prices, since sold-out within the city within a few hours of the ban of currency notes.
The source said jewellers were paid anywhere between 20 and 65 in addition to the going rate by consumers snapping up the precious metal with old notes.
Some industrialists and business men are turning smart bosses. Since they’re paying bonus and salaries in advance to employees with old denomination of Rs 500 and Rs 1000. One thing for sure, the employees are amused at boss’ gentleness.