Black Money Minus Corruption Is Benign

Black Money Minus Corruption Is Benign

Black Money Minus Corruption is Benign: Counter Point

Suddenly, it has become fashionable in India to talk about black money and behave as if it is the root cause of all problems and we all will become prosperous no sooner black money is put to tax net within the control of our dear government which has long defined public interest as its petty revenue interest only. Let us examine merit of this issue.

What is black-money ?

There is unanimity that money that has not suffered taxation, is black-money. Here, taxation is not just income tax or wealth tax, but must include excise duty, service tax or vat as well. In fact, once money escapes excise duty, it is bound to escape vat, income tax and thereby, wealth tax as well.

Source of black-money

We can imagine, there could be two sources of black-money:

i. Corruption i.e. bribe to government officials and politicians, from lowest to the highest. Yes, it also goes to purchase officers and quality approvers in private sector but at much smaller scale. It just can’t be in large scale in private sector where large scale bribe cannot remain secret, and once exposed, top management cannot overlook it. In contrast, in government, exalted prosperity of the officials and politicians is an open secret. From paupers, they quickly become owners of thousands of crores which simply doesn’t matter to our system at all. This source is not only guilty of criminality in letter and spirit, but also of an offence of tax evasion. Yes, even bribe money is liable to income tax (and TDS as well) should one declare it in his tax return.

ii. Tax evasion in commercial transactions i.e cash transactions by people with an intention to evade taxes but occasionally also to evade policy roadblocks. This could be in anywhere from vegetables and kiranas to real estate. This could also be due to government policies taxation is too high for business to be viable or where no returns are allowed in white money as in...

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