The total amount of taxable income that is not disclosed to the tax authorities is known as black or illicit income.
- Illicit commerce in forbidden chemicals, counterfeit currency, smuggling, arms trafficking, corruption, and terrorism are examples of riches generated via lawful or illegitimate activity.
- As a result, in addition to riches acquired illegally, the term “black money” refers to legal revenue hidden from government or public agencies:
- To evade payment of various taxes (excise duty, sales tax, stamp duty and income tax, etc.).
- To dodge compliance with several sections of industrial regulations such as the Minimum Wages Act (1948), Factories Act (1948), Payment of Bonus Act (1936), the Industrial Dispute Act (1947), and Contract Labour (Regulation and Abolition) Act 1970, among others.
- To evade compliance with other administrative processes and laws.
Impact of Black Money in India:
- In India, it is emerging as a much bigger problem day by day. India ranks among the top most countries in the world in black money generation and as per the former director of CBI, black money in India is around USD500 billion, and it is badly affecting the financial system of the country.
- It is creating losses in taxes, but it also is devaluing the Indian currency, further impacting the credibility of the country. The worst thing is the creation of a parallel economy as mostly the black money is used in illegal activities like drugs, terrorism, narcotics etc.