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Essay on Black Money for Students and Children
This long Essay on Black Money is beneficial for School Students of Classes 6, 7, 8, 9, 10, 11, 12, Competition Aspirant (SSC CGL CHSL MTS), and UPSC Exam Aspirants.
Introduction
Black money, which is called “Black Money” in English, is such money, which is practically hidden from the eyes of the Income Tax Department. This money is not accounted for anywhere in the government figures. This is the undeclared money of big businessmen, politicians, officials, mafia, and 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.
Thus, 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 not possible to keep an account of the income earned from illegal sources and tax it.
The main source of black money is the sources of illegal income. To hide this income, people look for countries where the income is tax-free. Examples of such countries are Singapore, Mauritius, Germany including Switzerland, etc. There is a frequent condemnation of Indians hiding black money in Swiss banks.
Menace of Black Money in India
Several speculations have been made regarding the extent of the black money economy in India. A former CBI Director of India claimed that the total black money in India is around $500 billion.
Though black money is a decades-old problem in India, it has become a real menace after the liberalization era. Illegal activities such as crime and corruption, non-compliance with taxation requirements, complex procedural rules, cultural and social practices, globalization, weak institutional policy, legal and implementation structures have led to and sustained the black money economy.
The criminal component of black money is made up of proceeds from smuggling, illegal trade in counterfeit, and banned goods, etc. The corrupt component of black money is fueled by leakages from government social spending programs, black marketing of price-controlled services.
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Problem through Black Money
The International Monetary Fund has 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 in 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, etc like many types of economic and political threats 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 has been ranked third in black money remittances amounting to $84.93 billion.
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Evaluation of Steps Undertaken by Government
Under pressure from India and other countries, Switzerland has made significant changes to its local laws to help foreign countries trace black money allegedly stashed in Swiss banks. These amendments will allow India and other countries to make “Group Requests” for information on suspected black money depositors, making it easier for Indian authorities to nab the hoarders.
- Demonetisation, which declared 86% of notes in 500 and 1000 denominations invalid at once, is considered a failure by critics. Around ₹16000 crore was returned to the banks, while the RBI had to spend ₹21000 crores for this massive work.
- The government has been successful in recovering black money of Rs 69,350 crore under the Income Declaration Scheme and the Black Money and Imposition of Tax Act. Another Rs 5000 crores were recovered under the Pradhan Mantri Garib Kalyan Yojana (PMGKY).
- Under the Undisclosed Foreign Income and Assets Act, 2015, around 650 people declared money worth ₹4,100 crores deposited in foreign banks as black money.
- Operation Clean Money has been launched by Income Tax Department for e-verification of cash deposits of large amounts till 31st December 2016. For this, the government used data analytics to identify individuals whose cash deposits do not match their income tax profile.
- In order to improve the indirect tax system by the Central Government, GST has been implemented from July 1, 2017. This is likely to improve tax administration and widen the tax base. In addition, it has shown a reduction in tax evasion.
- In March 2019, former Supreme Court Justice Pinaki Chandra Ghosh became the country’s first Lokpal. This is the main institution of the country to control corruption. It is an anti-corruption body. Along with all the public servants, the former Prime Minister of India will also be involved in its monitoring.
Conclusion about Black Money
Despite all the efforts, the problem of black money in India is still unsolved and a lot needs to be done to tackle it. There should be a suitable legislative framework relating to public procurement, Prevention of Bribery of foreign officials, Whistle Blower Protection, and UID Aadhaar, etc.
Black money badly affects the progress of a nation and creates an economic and social imbalance. This is a battle that no government can fight alone. People should also be cooperative and alert to fight against any kind of financial fraud or illegal activities.
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