In India, black money is funds
earned on the black market, black money. The black money is accumulated by the
criminals, smugglers, hoarders, tax-evaders, and other anti-social elements of
the society. Around 22000 crores of rupees are supposed[citation needed] to
have been accumulated by the criminals for vested interests, though writ
petitions in the supreme court estimate this to be even larger, at ₹90 lakh
crores.
on which income and other taxes have
not been paid. Also, the unaccounted money that is concealed from the tax
administrator is called
The total amount of black money
deposited in foreign banks by Indians is unknown. Some reports claim a total of
US$100.06 trillion is held illegally in Switzerland. Other reports, including
those reported by the Swiss Bankers Association and the Government of
Switzerland, claims these reports are false and fabricated, and the total amount
held in all Swiss bank accounts by citizens of India is about US$2 billion. In
February 2012, the director of India's Central Bureau of Investigation said
that Indians have US$500 billion of illegal funds in foreign tax havens, more
than any other country. In March 2012, the government of India clarified in its
parliament that the CBI director's statement on $500 billion of illegal money
was an estimate based on a statement made to India's Supreme Court in July 2011
Sources of income black money
Foreign direct investment (FDI) is
one of the legal channels to invest in Indian stock and financial markets. As
per data released by the Department of Industrial Policy and Promotion (DIPP),
two of the topmost sources of the cumulative inflows from April 2000 to March
2011 are Mauritius (41.80 percent, US$54.227 billion) and Singapore (9.17 per
cent, US$11.895 billion). Mauritius and Singapore with their small economies
cannot be the sources of such huge investments and it is apparent that the
investments are routed through these jurisdictions for the avoidance of taxes and
for concealing the identities from the revenue authorities of the ultimate
investors, many of whom could actually be Indian residents, who have invested
in their own companies.
Investment in the Indian stock
market through participatory notes (PNs) or overseas derivative instruments
(ODIs) is another way in which the black money generated by Indians is
re-invested in India. The investor in PNs does not hold the Indian securities
in her or his own name. These are legally held by the FIIs, but derive economic
benefits from fluctuations in prices of the Indian securities, as also
dividends and capital gains, through specifically designed contracts.[citation
needed]
Foreign funds received by charitable
organizations, non-government organizations (NGOs), and other associations need
not disclose the Indian beneficiary.
Gold imports through official
channel and smuggling is a major conduit to bring back the black money from
abroad and convert into local black money as the gold commands high demand
among the rural investors particularly.[13] Also, fictitious high-value round
trip transactions via tax haven countries by diamonds and precious stones
exporters and importers is a channel for to and fro transactions outside the
country. Also, fictitious software exports can be booked by software companies
to bring black money into India as tax exemptions are permitted to software
companies.
Unlike in earlier decades, the
interest rates offered abroad in US currency is negligible and there is no
capital appreciation if the money is parked abroad by the Indians. So, Indians
are routing their foreign funds back to India as the capital appreciation in
Indian capital markets are far more attractive
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