What is black money and how can it be controlled

What is black money and how can it be controlled

By Manohar Manoj

The actual meanings of black money as per its definition differentiate itself to the popular perception what the public has about this. Black money is not loot money. Because loot money does not look to be openly, whereas black money is visible openly to all of us. The reason is that, the black money is in fact unaccounted money, the money which has not been crossed through tax pipeline. Whatever the cases of tax evasion, non-declaration and under declaration of income and asset, undisclosed source of income, windfall gains, unearned profit, siphoning of funds these all constitutes size and volume of black money in the country. There are further two points also which is related with black money, first we have undisclosed black money which is being kept in hideouts in the country and abroad both. Second is the disclosed black money, which get declared also and taxes are paid over it but the source of earning given are not to be correct. So under the process of income declaration and paying taxes over this, it is not necessary that declared income is valid income, it may be earned through siphoning of funds or through speculative measures. If the mentioning of source of income is not correct, merely paying taxes over this does not give impression of a full proof and fair system. In India, we have many examples where black money is openly converted into white money and huge profit is being earned over this. Therefore, the conversion of black money into the white money is also one of the major aspects of this issue. Money spent over real estate, education, health, media, entertainment are said to be coming mostly from the black money and latter on it become white money. Sometimes we see person shows their extra income through agriculture or from their paternal asset or from gifts etc, it is not necessary that those details are fully correct. So in the dictionary of black money, the registered income or the pay role income, which gets declared automatically while filling income tax return, that is purely accounted income and it never constitutes black money? Secondly the income which is not accurately registered, it has always scope of either wrong information or incomplete information. That is why see the in all organized labour market the income earned by the workforce, can never evade taxes, so they were given extra tax incentive limit in salaried income category, which has been withdrawn now.

Ultimately, the problem of black money is the outcome of the absence of full proof system of all types of financial transaction. In the absence of technology, authentic accounting system the black germinates in the system. Though, in last one and half decade our transaction system has improved a lot. The introduction of PAN system was in a way a tool to know the information of all transaction. In cases of payment which is made through cheques and  other form of bank notes, PAN is mandatory to mention in all above 50 thousands transaction. But, the real problem arises when all transaction not come under the scanner. We still have large numbers of payment being made through cash.

Moreover the problem of black money is directly linked with the jurisdiction of tax department, the two major organization CBDT and CBEC. There are many wings of these two major organizations which can check, detect, search and seized black money in its origin and from its spread both. We try to look into the functions of several wings of CBDT, how they can become instrumental to check this gigantic menace.

CBDT- a. Chief commissioner, income tax b. DG, Income tax investigation c. Directorate of IT Intelligence and criminal investigation d. DG, International taxation.

a.       Chief commissioner , income tax first and foremost watches those who despite their taxable income, do not file return, if file return, they do not give full details

b.      DG Income tax investigation- it does search and seizure operation. Those who do not disclose their full business details and asset, if dept. have tangible information, it makes out its seizure operation

c.       Dir. IT Intelligence- it also gather informations about the tax evaders

d.      It basically deals with international aspect of taxation. Whether it is expatriated income or repatriated income . it watches the earning of all foreign venture, this dept. is primarily responsible for the black money send to the foreign accounts

CBEC A. Directorate of revenue intelligence, it deals with the all tax evasion related with customs and excise

CEIB(central economic intelligence bureau)- coordinating with all enforcement agencies who deals with all kind of economic offences of the countries

ED (Enforcement directorate)- it works over irregularities committed over FEMA act(foreign exchange management act)

FIA(Financial intelligence unit)- monitor suspect financial transaction, examine 7 lakh investment reports and around 1000 financial transaction every month.

Anti bank frauds- it is special cell which monitors over bank frauds

Anti NBFC Frauds- it is also special cell to look after the frauds in NBFC which has come under the purview of SEBI. SEBI is authorize to monitor all ponzi schemes.

All above organizations, which come under ministry of finance, can deal with the menace of black money through their own methods and ways

NIA(National investigating authority), a Home ministry outfit

NCRB (National crime record bureau),,,,,,,,,,,,

CBI (CENTRAL BUREAU OF INVESTIGATION)----DEPT. OF PERSONNEL, PMO

State police   ----------------------state governments

Anti Sales tax frauds----------------,,,,,,,,,,, they gather information about the tax evasion made over the sales tax or VAT

In conclusion, the efficiency of tax department and authentic financial system is very much related with black money. The existence of black money is ultimately related with the misappropriation of public money and revenue loss of the government also. However, to reveal and recover the black money is not so simplistic. Once the money is gone through the leakages of our financial system, it is very difficult to restore it. So it is better to make and adjust our financial system in such a full proof manner with the help of technology and all, so that we can thoroughly check black money, very from its source. If, we ensure our system today onwards to be free from corruption and black money, that would be better idea to contain it and it is possible also, but the money , which has already gone in their hideouts either in domestic world or foreign world, the best way to allure them, through VDIS kind of schems or through investment route, that is more clever way rather being trapped in a long litigation and criminal jurisprudence process. The most important thing  is to correct the system and upgrade it for the present and for the upcoming future.