Black money is basically the accumulation of income obtained illegally. It is not declared for tax purposes. The issue is prevalent in India and the government has come up with stern measures to deal with it lately. The money earned via unlawful means is known as black money. There are various sources of generating black money and people have been practicing these for decades despite the negative impact they have on society.
Long and Short Essay on Black Money
Essay – 1 (400 words)
Black Money is one of the major problems being faced by our country these days. This is one of the reasons behind the economic disparity that in turn causes social inequality which is the root cause of several problems in the country. There are a number of factors that lead to this problem. Some of these include the high rate of tax, increased cost of living, inflation, different rates of excise duty and the real estate market.
Ways to Control the Problem of Black Money
It is important to control the problem of black money as it is hampering the growth and development of the country to a large extent. Here are some of the ways in which we can control this issue:
- The tax system should be realistic. People must not see it as a burden. The high tax rate would only make people look for ways for tax evasion.
- The process of tax collection must be made more efficient. The government must take certain steps to award the officials who are dedicated and sincere towards this task so as to motivate more and more officials to take this seriously.
- The government must work on its price control policy as it is also one of the reasons behind the generation and accumulation of black money.
- The public sector projects must be monitored stringently so as to bring down their expenditure.
- The private sector investment expenditures must also be monitored effectively.
- The government must take action against corrupt officials who in many ways contribute to the growth of black money.
- Administrative corruption must be controlled at various levels.
- The sale and purchase of properties must be thoroughly monitored by the IT officials to ensure that people do not hide any black money in the event.
- The politicians, celebrities, senior civil servants and media people must set an example for the general public to pay their taxes.
- Incentives should be given to those who provide voluntary disclosures of income.
- The exchange rates must be realistic and should reflect our comparative rates and position in the world economy.
While the Modi government has taken the step of demonetization to break this illegal wealth accumulation, there is still a lot that needs to be done in order to bring this problem down. People must understand the importance of paying the tax and should refrain from concentrating black money. The small contribution each citizen does in the form of taxes helps in the development of the country.
Essay – 2 (500 words)
Black money is the money on which tax is not paid. It is hidden from the government just to keep it exempted from tax. There are a number of means used by people to keep their money under wraps and escape from paying the tax. Here is a look at some of these and also the way the government has tried to curb this problem in the recent past.
Black Money Deposited in Foreign Lands
Many big businessmen, ministers, and celebrities are known to have deposited their money in foreign banks. Though the total amount deposited by Indians in foreign banks is not known, there are many reports claiming an estimated amount of money deposited by Indians in their foreign accounts. As per one of these reports a whopping US$1.06 trillion has been held in Switzerland while another report claims that Swizz bank accounts of Indians include around US$2 billion. It has also been claimed that illegal funds of Indians in foreign tax havens amount to around US$ 500 billion.
Demonetization – A Step to Eradicate Black Money
Recently, the Modi government took a major step to eradicate the problem of black money. On the 8th of November 2016, Narendra Modi announced that 500 and 1000 rupee notes would cease to be legal from midnight. ATMs all across the country were closed on the 9th and 10th of November. These were refilled with 2000 rupee notes and a new version of 500 rupee notes. The old notes were removed completely from circulation. As per the government, this action would bring down the accumulation of black money and bring down illegal businesses and activities that are funded by the same.
The sudden announcement of the withdrawal of old currency notes and the shortage of new notes created havoc in the country and disrupted the normal functioning across various sectors for several weeks. The decision had mixed reactions from the public. The decision was condemned by many stating that it has only caused inconvenience to the general public. It has been criticized for being poorly planned. The public came out to protest against the government in various parts of the country.
However, the government claimed that the move is aimed at improving the overall condition of the society and people will see the positive results in the long term.
Impact of Demonetization
While the move was condemned and criticized by many here is a look at the positive impacts of demonetization:
- It was majorly destroyed due to this move of the Modi government.
- It came as a shock for the political parties and ministers who used black money for campaigning and other activities. It disrupted the ill practices used by these parties to win votes.
- The amount of black money floating in the real estate sector saw a huge dip.
- Hawala transactions that promote terror activities came to a halt.
- It has also impacted Maoists and their movements negatively.
The issue of black money has been eating the country like a parasite. While demonetization has helped in controlling it to some extent there is still a lot that the government should do to get rid of this issue.
Essay – 3 (600 words)
People earn money from different sources and do not bring it to notice so that they can refrain from paying tax. This accumulation of money on which tax is not paid is known as black money. The problem of black money has been prevalent in our country for long. There are a number of factors that contribute to this problem.
Causes of Black Money
Here is a look at the various causes that lead to the problem in India:
- High Tax Rate
The rate of tax in India is quite high. The increase in taxes and duties has forced people to take the route to illegal wealth accumulation. The tax-free income limit in the country is just Rs. 25,000/-. This amount is not sufficient to run a household these days when the cost of living is sky-high. This is the reason why professionals who earn more tend to hide their income so that they don’t have to pay tax.
- Price Control Policy
The prices of certain commodities such as fertilizers, sugar, cement, etc are regulated by the government by way of its Price Control Policy. The policy is rigid and does not go by the ups and downs in the market. The private manufacturers and retailers take advantage of this policy that results in black money.
- Different Excise Duty Rates
The government has set different rates for excise duty based on the quality of products. In order to avoid paying a higher rate of excise duty, the manufacturers at times downgrade a product. This leads to the generation of black money.
- Real Estate Transactions
Real estate transactions involve a huge amount of money. People accumulate black money via real estate transactions. Purchasing property at a cheaper rate and selling it when the prices rise has become a lucrative business and a lot of black money is generated with this.
- Quota System
The government has set a certain quota for export, import, and foreign exchange. While this is set for the benefit of the people it is often misused to accumulate black money.
The high inflation rate is also known to be one of the causes.
Impact of Black Money
Black money does not only have a negative impact on the country’s economic condition but also has adverse social consequences. It creates an economic disparity in the country which undoubtedly is the basis of social disparity. Such practices are the reason why the rich here are getting richer and the poor are getting poorer. Social inequality leads to frustration among people and gives rise to crimes such as robbery, bribery and more.
Tax evasion also means the amount that could have been used for the country’s growth and development did not reach the government. If the government does not get enough revenue it would be unable to take up new projects for the development of the country and the uplift of the poor sections.
The countries where people pay taxes religiously are far better off as compared to those where there is a huge amount of accumulation of black money.
The government has taken certain steps to eradicate the issue of black money. The recent and one of the major steps taken in this direction was demonetization. While this step helped in eliminating black money to some extent many people condemned it. However, even if it helped, it definitely was not enough. A lot more needs to be done in order to stop this ill practice. The government must look for more effective measures to curb this problem. And remember, the government alone cannot bring this issue to an end. It can only be curbed if each and every citizen of the country contributes his bit.