Some Common Tricks to Convert Black Money in White Money
The growth of unaccounted money or black money has resulted in the creation of a parallel economy-giving rise to many economic social evils that in turn have created regulatory and social problems in the overall system. As the Income Tax Department is tightening its mechanism, some people are using various tricks to convert black money into white
The governments have failed to estimate the true size of the economy. The growing unaccounted money Has led to growth in spending for lavish goods resulting in a shift in the production pattern towards luxury goods from essential items; the gap between the rich and the poor will keep growing bigger and bigger.
In a bid to control the growth of black money, governments rationalize the tax structure, as many consider irrational tax system as the primary reason for creating black money. In addition to imposing server penalties on tax evasion, governments also conducts tax raids and seize the unaccounted money from individuals and corporates, and offer them a chance to pay a certain amount of their undisclosed money as taxes and make it legal.
How Can You convert your Un-accounted Black money into White Money
As higher tax regime is one of the prime reasons for growing black money in the system, if you have over the time, accumulated wealth by evading taxes, the ideal situation is to convert such black money into white at the earliest.
If you are worried about paying higher taxes in the process to convert your black money to white, you can reduce the tax burden on a portion of that money by showing it under different heads that do not attract taxes or such heavy taxes. However such tricks to convert black money donot always succeed and can get detected
Some of the popular methods to convert Black Money to Legal Money
1. Gifts from Relatives:
One of the popular ways to convert your black money into white is by showing the un-accounted money as gifts you have received from relatives on an occasion like your marriage anniversary, Birthday, or other such special occasion in the family. Additionally, such gifts received from relatives is tax exempt, so by accounting your money as gift, you can convert it into white without paying any tax.
2. Income from Agriculture:
You can show some incomes as income from agriculture, but for that you need to have agricultural land that is being used for farming, gardening, etc., alternatively, you can also take lease of land and show your money as an income from farming on such land. You can show your un-accounted money as income from farming. Agricultural income being tax exempt you need not worry about any taxes on such disclosures.
3. Giving money to Family Members:
You can gift money to all the members in the family and deposit such money in their bank accounts. For that you need to open bank accounts for each of the family member and deposit your money into those accounts. Normally people file some returns on some vague reasons showing income of such members who are taxed at lower rate of tax
4. Ornament Sale Receipts:
You can show some incomes as income from sale of gold, silver ornaments, etc. You need to contact a reliable jewelry merchant for that who would charge you a certain percentage for giving you the receipts.
There are many ways to invest your money and save tax, even payment of your insurance premium in cash. You can opt for instruments that fall under 80C tax savings plan. Savings under PPF accounts, Tax saving mutual funds, fixed deposits are safe sources to secure your money without paying any taxes.
6. Income from Profession:
You can show some money as income from profession such as tuition classes, training, etc., for which you have accepted fee in cash.
7. Buying Real Estate:
You can buy house on the name of your spouse and deposit money into their accounts as rent paid.
Well, there are many ways of converting black money into legally accepted money, but the best way still would be to declare the money to the government and pay taxes regularly, just in case if you have missed out filing the returns you can take advantage of the voluntary disclosure of income scheme.