Black Money and demonetization
Black Money and Demonetization
Black money is generated by not accounting business profits by businessmen and money earned through corruption, bribes, siphoning of project funds by politicians and bureaucrats. These category of people do not sit on hard currency that they so amass for longer period. Mostly such money gets invested in real estate which in turn is owned by the trusts, societies, HUFs, partnership firms owned by them. Only a fraction of such investments get accounted as the declared value of the property is much lower than the price actually paid. For example when a politician buys a land for Rs 10 crore the recorded sale deed is only for about Rs 50 lakhs. Simply the black money is hidden in such properties. Our netas and babus purchase lands, buildings and apartments in different parts of the country to escape easy detection.
There is a provision in Income Tax rules that if a reported value of a property is less than fair or market value the department can acquire the property at the so called agreed transfer price. But this provision is rarely exercised.
Government cannot track properties owned by an individual if such properties are lying in different part of India. Land records are not fully computerised and not linked to either PAN or Aadhaar. Entities like partnership firms, HUF, Trusts and societies help these corrupt people to avoid detection.
No real benefit will result unless the real estate investments are targeted. Under reporting of land value is the easiest way to hide black money.
All IT, ED raids have been targeted at businesses and no politician is touched. Netas protect netas and fool the people of India. Sure no politician will be caught this time. 90% of politician's black money is hidden in real estate and nobody is sitting on hard currency.
The white paper on Black Money prepared by Govt of India is very detailed and still holds good
http://finmin.nic.in/reports/
Current Best(sic) practices to convert black money into white
1. Many educational institutes are paying 6-10 months salary as advance to their staff in old currency
2. Students of colleges are given Rs 40000 in old currency to get it converted by offering 15% commission
3. Cooperative societies and banks controlled by politicians are working 24x7 in creating deposits and FDs back dated and parking old currencies
4. Brokers are busy exchanging old currency at 30-50% discount
5. Buy land or property by paying 20-30% high rate using old currency
6. Dole out interest free cash loans to employees/ self help groups and with repayment scheduled one year later
7. Buy US dollars in the grey market
Updates to follow.
Black money is generated by not accounting business profits by businessmen and money earned through corruption, bribes, siphoning of project funds by politicians and bureaucrats. These category of people do not sit on hard currency that they so amass for longer period. Mostly such money gets invested in real estate which in turn is owned by the trusts, societies, HUFs, partnership firms owned by them. Only a fraction of such investments get accounted as the declared value of the property is much lower than the price actually paid. For example when a politician buys a land for Rs 10 crore the recorded sale deed is only for about Rs 50 lakhs. Simply the black money is hidden in such properties. Our netas and babus purchase lands, buildings and apartments in different parts of the country to escape easy detection.
There is a provision in Income Tax rules that if a reported value of a property is less than fair or market value the department can acquire the property at the so called agreed transfer price. But this provision is rarely exercised.
Government cannot track properties owned by an individual if such properties are lying in different part of India. Land records are not fully computerised and not linked to either PAN or Aadhaar. Entities like partnership firms, HUF, Trusts and societies help these corrupt people to avoid detection.
No real benefit will result unless the real estate investments are targeted. Under reporting of land value is the easiest way to hide black money.
All IT, ED raids have been targeted at businesses and no politician is touched. Netas protect netas and fool the people of India. Sure no politician will be caught this time. 90% of politician's black money is hidden in real estate and nobody is sitting on hard currency.
The white paper on Black Money prepared by Govt of India is very detailed and still holds good
http://finmin.nic.in/reports/
Current Best(sic) practices to convert black money into white
1. Many educational institutes are paying 6-10 months salary as advance to their staff in old currency
2. Students of colleges are given Rs 40000 in old currency to get it converted by offering 15% commission
3. Cooperative societies and banks controlled by politicians are working 24x7 in creating deposits and FDs back dated and parking old currencies
4. Brokers are busy exchanging old currency at 30-50% discount
5. Buy land or property by paying 20-30% high rate using old currency
6. Dole out interest free cash loans to employees/ self help groups and with repayment scheduled one year later
7. Buy US dollars in the grey market
Updates to follow.
posted by Prasad P.N., Pondicherry @ 10:03 AM
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