The subject lures any reader because most of us are in possession of ‘Black Money’ & are interested in finding a device to convert their ‘dirty money’ nicknamed as ‘Black money’ into ‘White money’. The moment the colour of the money changes from dark, dingy, gloomy & frightening ‘black’ to sparkling, radiant, warm & appeasing ‘white’, the glow on one’s face is inconceivable. The very thought of this complete transformation of illegitimate to legitimate, from a taboo to a prized possession, from waste to thriving with life, from unwanted to welcome is indeed very elevating. Yes, there are ways you can get rid of this obnoxious and convert it to a rewarding experience.
The first question that arises in mind is what exactly is ‘Black Money’. The term is not easy to define as it has the characteristics of a chameleon, regularly changing its colour to suit the purpose. It includes ‘unaccounted income’, ‘black income’, ‘dirty money’, ‘black wealth’, ‘underground wealth’, ‘black economy’, ‘parallel economy’, ‘shadow economy’, and ‘underground’ or ‘unofficial’ economy” or in commercial terms- ‘Number 2 Money’.
India is the 2nd largest populated country in the world having population of 130 crores. But one would be aghast to know the figures of the number of Income Taxpayers & their income details. CBDT has disclosed in early 2020 that only around 1.46 crore individual taxpayers are liable to pay income-tax. Further, around 1 crore individuals disclosed income between Rs. 5-10 lakh and only 46 lakh individual taxpayers have disclosed income above Rs.10 lakh. The number of individual assessees who have disclosed income above Rs. 5 crores is only 8600. Chartered accountants, lawyers, doctors & other professionals who have disclosed professional income of more than Rs. 1 crore are only 2200 in number. These figures amply demonstrate that there is mass scale tax evasion in our country by all sectors of the society.
As per Data available, the Income Tax Department detected undisclosed income to the tune of Rs 14,697 crore during search and seizure operations till February in the financial year 2016-17. The number of Searches stood at 1,037 till February 2017, compared with 382 till February 2016. The amount of seizure of cash, jewellery and other valuables also increased to Rs 1,416 crore till February 2017 from Rs 667 crore till February 2016. Thus, although the provisions for search & seizure have a daunting effect on the assessees but they are in no way able to contain the generation, circulation & usage of unaccounted money in our economic system. Perhaps the mass scale corruption in the political, bureaucratic & judicial system & the Nexus of the corporates/ large business houses with them is solely responsible for the same.
The Government has in the past launched a number of Voluntary Disclosure Schemes by different names. These schemes were very unconventional but successful wherein an opportunity was given to the Income Tax or Wealth Tax defaulters to disclose their undisclosed income/ wealth by paying at the mandated Tax without the fear of prosecution. In VDIS 1997, over 350,000 people disclosed their income and assets under this scheme, which brought a revenue of Rs.7800 crores to the Indian Exchequer. Another notable scheme was Income Declaration Scheme, 2016 which was an amnesty scheme introduced by Government of India as a part of the 2016 Union budget to unearth black money and bring it back into the system.The scheme was widely publicized and it received tremendous response. As a consequence, 64,275 declarations were filed with a total tax collection of Rs. 65,250 crore of income in the form of undeclared assets and incomes. It will not be out place to mention that the Government had come out with schemes as early as 1975 known as the Voluntary Disclosure of Income & Wealth Act,1976. In 1981, the Government issued Special Bearer Bonds under a scheme which allowed people to invest their black money in these bonds and enjoy freedom from investigations and prosecutions for tax evasion in respect of their holdings of these bonds. Inspite of repeated Disclosure schemes, the arteries of our Economy has not been unclogged and Black Money continues to stream the system.
The Government, understanding it’s limitations in containing flow of Black Money, introduced the Prevention of Money Laundering Act, 2002; Benami Transactions (Prohibition) Act, 1988 further strengthened by Benami Amendment Act of 2016 & Benami Transaction amended by Finance Act 2019 and Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. However, inspite of these stringent Legislations, the generation, usage & circulation of Black Money is in vogue even in a bigger way. The Modi Government’s move of demonetization in November 2016 could not contain the flow of Black Money in our economy.
The Government further amended the Income Tax Act and now Unexplained cash credits are taxed at flat rate of 60% without providing any benefit of basic exemption limit and irrespective of the tax slab. Surcharge is levied at 25% and a penalty of 6%. The final tax rate comes to 83.25% (including cess). Penalty is not levied in case unexplained cash credit is already included voluntarily in the return of income and tax on the same is paid on or before the end of financial year. Else, the stringent penalties and threat of prosecution looms large on such tax evaders.
Now coming to the million dollar question as what to do with Black Money in possession of an assessee. After the aforesaid amendment in Income Tax Act, it is not possible now to introduce black money into the books/banks & declare this as income from other sources and pay regular Income Tax at the maximum marginal rate. If an assessee parks his unaccounted money in Bank Lockers, it is certain that one day or the other, Government would bring Ordinance to inventorise the contents of the lockers & he would be exposed. The cash & bullion parked at home is always risky from theft & being confiscated in Search & Seizure operations. The investment of Black Money in Real Estate is also a big risk as under the latest Benami Act such properties can be confiscated & prosecution launched against the Benami holders. The amount of tension on account of possession of unaccounted cash, bullion or jewellery is insurmountable and people possessing huge sums of Black Money often succumb to cerebral haemorrhage due to High BP, cardiac arrest or brain stroke due to sustained fear & tension. There appears no way to save oneself from the rigours of Black Money.
In view of the above, the suggestions as to what do with Black money are as follows:
1. Stop further generation of Black Money.
2. No gimmick of penny stocks, fabricated gifts and fabricated earnings to pump your black money to your books.
3. Try to understand the stringent provisions of taxation of unexplained investments and the onslaught of fiscal penalties and prosecution.
4. Try to understand the stringent provisions for taxation as a result of detection of unexplained Incomes as a result of Surveys & Searches under the Income Tax Act.
5. Once you thoroughly understand the legal position with regards to the Black Money and it’s aftermath, your charm & captivation towards unaccounted wealth would vanish and Black Money would become a Curse/Bane.
6. It is not wise to throw the Black Money in the drain but there are better and remunerative ways to do away honourably with the dirty money.
7. So, the best way to do away with this bad money is to:
* Go out in these winters with trucks of blankets & warm clothes to save the poor & the downtrodden from inclement weather
* Go to rural & municipal schools with copies, pen & stationary for distribution
* Go to Hospitals with food packets for the relatives & fruits for the convalescing
* Go & conduct mass marriages of poor girls
* Go to charitable institutions involved in the service of mankind & donate anonymously
* Go to unprivileged schools & donate books for their libraries
* Go to old age homes and help the deserted senior citizens
* Go to doctors and help give medicine, get their free surgeries and post operative care
* Help the disabled by giving them calipers & tricycles.
* Do all that you can do for the service of the needy.
Just remember that all these errands have to be done anonymously & with compassion & service in mind. You will soon get rid of the ‘Evil Money’ and you would get a return gift of peace & solace which is unparalleled. The Blessings & good wishes of the needy will be a permanent asset in life. This is the only known & available way to utilise Black Money for permanent Returns.