The Famous Indian Vanishing Trick--white Paper On Black Money

The Union Finance Minister, Mr Pranab Mukherjee, has finally presented to the Parliament the much awaited White Paper on Black Money. Contrary to expectations it does not make any unknown revealations nor does it name any defaulter. Niether does it put out a likely figure of the extent of black money in the country. To be fair to him, it is not an easy task to arrive at a figure because, the practice of generating black money is not only widespread but is also done so smartly that it escapes detection very easily. It is thefamous Indian vanishing trick by

which white money becomes black money,

The first problem is how to define black money. There is no uniform definition available anywhere. There are many terms used like black income, dirty money, unaccounted income, parallel economy, underground economy etc. Generally the income on which taxes are not paid, is supposed, to constitute black money. However such income could be generated by both legitimate and illegitimate activities. In legitimate activities there is generally unde-rreporting and in illegitimate activities there is total concealment like income from smuggling, gun running, corruption etc.

The report states that concealed income, to the tune of Rs 19,938 crore was detected, by the investigation wing of the taxation dept., in the last two fiscal years. Under reporting of income to the tune of Rs 11,800 crore was detected since April, 2009. Another area of tax avoidance is the mispricing of transfer pricing, to the tune of Rs 67.768 crore, by showing deliberately wrong prices for services and goods provided by one part of business to another part for calculation of

profit and loss. The real estate business is another area where there is either no reporting or under-reporting of property transactions. Real estate forms nearly 11% of India’s GDP and is a favourite parking place for black money.

It also explains how corporate structures are used to avoid tax payments and mentions about Vodafone retrospective tax liability case. The report also informs that the black money in Swiss banks has come down from Rs 23,373 crore in 2006 to Rs 9,295 crore in 2010. The paper also suggests the expansion of information exchange at international level to arrest the cross border movement of black money.

The 97 page report suggests the setting up of Lokpal and Lokayuktas to deal with the manace of black money. It also recommends setting up of fast track courts and deterrent punishment for economic offenders. In a surprise but welcome suggestion it proposes tax incentives for using credit and debit cards as they leave an audit trail. It also highlights that the implementation of the Goods and Service Tax will help in integrating the efforts of different agencies dealing with black money. It also suggests increased payment options by electronic payment modes.

The white paper on black money is out. Will it lead to reduction in black money circulation and generation is doubtful. As some one has very famously said that in life there are only two unavoidable things , taxes and death. Human beings therefore try very hard to avoid or delay as far as possible the occurences of both. But the government and god ensure that both take place.

Article Written By vks1000

Am a retired professional who is now into education of International Business and management topics. I enjoy writing and like reading on politics,economics,management and films. I take life as it comes and try to keep myself busy with a variety of activities.

Last updated on 17-07-2016 73 0

Please login to comment on this post.
There are no comments yet.
Shah Rukh Khan The Don Of Controversies
Can The Rupee Be Saved-- Yes -- If There Is A Will There Are Ways