You must have heard of the recent demonetization of Rs 500 and Rs 1000 notes. The move was to control the flow of black money in the country, said our Prime Minister.
So, what exactly is black money? Currencies that is black in colour? Absolutely not.
The universally accepted definition of black money is this- any money on which tax is not paid. You may know that all wage earning citizens need to pay tax in a country. Black money is income that is hidden from the government. It could be earned by legal or illegal means- either way, it is a crime.
Not just large amounts, but smaller amounts of money that go without proper recording is also considered as black money. For example, if you go to a shopkeeper, and purchase something for Rs 100, but do not take a receipt for it. Here the purchase is not recorded in the accounts of that shop so the shopkeeper doesn’t have to pay tax on it. Thus, the money he got from you becomes black money.
As money turns illegal with tax evasion, transference or transaction of it is a crime too.
Without taxes, the government will not get enough money to meet the country’s expenses. This in turn will affect welfare schemes for the poor. So, knowingly or unknowingly, tax evader means those who escape paying taxes, are ruining the lives of the poor too.
This also creates a bigger division between the rich and the poor. The government gets affected too, and slowly, it will run into deep financial crisis.
It is hoped that with the recent move of demonetization, the tax evaders will be forced to return the high denomination bank notes. In this way, hidden money will be exposed and the cheats can be arrested.