Professional Documents
Culture Documents
Chapter 1
Chapter 1
2) Sources of Data:
S.I.E.S COLLEGE OF COMMERCE AND ECONOMICS, SION
1.4 LIMITATION
Some of the limitation are faced during the project are :
1) The information collected is limited by the authenticity and accuracy of information. The
data collected from the website are limited.
2) The time predefined for these project is very short for covering such a big project.
Controls and licensing system:Black money is increasing in India for the reasons of controls, permits, quotas and
licenses.
Higher Rates of Taxes:Higher rates of taxes has resulted a growing tendency of tax evasion among the tax
payers. Tax evasion is common in income tax, corporate tax, corporation tax, union excise duties,
custom duties, sales tax , etc.
Ineffective enforcement of tax laws:In India, the enforcement of tax laws in respect of income tax, sales tax, excise duty,
stamp duty etc. is quite weak. This has led to enormous unrestrained evasion of taxes and piling
up of black money.
Funding of political parties:There is an upward tendency of supporting of political parties with the help of black
money. Big trade houses are donating an enormous amount of black money to the political
parties, especially the ruling party with the sole objective to tame the political leadership for
deriving undue profit by manipulating policy decisions.
Second World War after influence:During the time of Second World War, a lot of the Indian industry found circumstances
favourable for black marketing. Supply industrial goods from the traditional supplies of the West
were cutoff, which resulted severe shortages in many essential fields. This formed the sentiment
of making of marketing money out of shortages and not out of extension of the business
activities.
Inflation:The addition in prices of commodities like petrol, etc. in international market, boost in
prices of commodities due to high increase in duties and taxes imposed by the government, the
Agricultural Income:The reluctance to bring agricultural earnings in the realm of income tax has also
contributed to creation of black money. Big industrial houses, over the past few decades have
entered the agriculture sector in a big way by acquiring big farms. The black money accrued
from other sources is sought to be transformed into white by viewing it on the agricultural
returns account.
Privatization:Privatization has opened up a new area to the private sector as well as to ministers and
bureaucrats for making black money. It is expected that many scams come to light for making
black money through privatization.
Transactions in Urban Real Estates:Real estate transaction is a significant source of generating black money in India. Since
the sale of property on lease hold is permitted by the government only at a payment of certain
amount of premium to it, the lessee generally completes this transaction through the power of
attorney so that they escape from paying the premium which is fixed on the basis of the
difference between the current market price and the price fixed by the government. In case of
freehold property or the property in which there is complete transfer of ownership at one go, the
black income is generated through the sale of the property at the actual value but registering it at
a lesser value than the sale value of that property. Thus, a vicious circle is established in the sale
and purchase of different kinds of property. In other words, the pugree system is also another
source of black income in the property business. It is both the outlet ad the source of black
income as there is net absorption of black income of the seller.
Other Factors:Generation of black income in a country like India also results from other different
Black income has been causing underestimation of GDP in India as an enormous volume of
income is diverted to this unaccounted sector resulting in growing continuation of parallel
evasion.
Black money has resulted in the diversion of resources for the purchase of real estate and
luxury housing.
Black money has resulted in transfer of funds from India to foreign countries through
clandestine channels.
The availability of black incomes with businessmen and capitalists and the consequent
Departure from the previous UPA governments reluctance to set up SIT even after the
government.
The government is well aware that all money stashed in foreign banks is not black and there
is a need to investigate each case properly. Moreover, disclosing names of the account
holders in foreign banks violates the confidentially clause in treaties with other countries.
With a fresh list of account holders making waves, the SIT is considering all old and new
cases and efforts are being made to complete the probe by 31 March.
side and also swiftly provide information on requests relating to non-banking information.
Switzerland has also assured that they would commence talks with India for concluding an
Automatic Exchange of Information (AEOI) Agreement between India and Switzerland at
the earliest, after completion of their domestic procedures. This is the first time that
Switzerland has agreed to commence discussions on a bilateral agreement on AEOI.
Combating unaccounted money and tax evasion is not an easy task. However, the
governments initiatives are yielding positive results. Negotiations with Swiss authorities and
other measures would assist the Income Tax Department in its investigations. The government
has also assured that the cases are in the advanced stage of investigation and all names will be
made public.
Taxation experts recommend that the new government should come out with a six-month
amnesty scheme that will facilitate transfer of such funds back home on voluntary basis with
payment of 40 per cent tax. They point out that the 40 per cent tax deduction is ten per cent
above the maximum effective tax on income and would dissuade misuse of the scheme for
turning internal black money into white through a transfer mechanism.
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CHAPTER 4
LINK BETWEEN REAL ESTATE MARKET AND BLACK MONEY
The attraction of transactions in real estate as a black income generating activity is the
focus of the two commonly observed factors that make the sector attractive are, (i) low
probability in the detection of tax evasion with a low cost penalty rate on being caught and (ii)
high rate of appreciation on investments in real estate market. The two factors pointed are
concerning the attractiveness of the real estate market are closely related.
The high rate of return on investment in some activities of this market is realised mainly
due to non-payment of taxes like capital gains and stamp duty. A common method of evading the
payment of tax is the undervaluation of properties. This strategy works well in the real estate as
both buyers and sellers have an incentive in carrying out it. While the seller of real estate
property gains from the undervaluation by paying lower capital gains tax and the subsequent
wealth tax, the buyer saves in terms of less payment of stamp duty and registration fees.
As both buyers and sellers have an incentive in under-reporting, this link between real
estate and black money can be called incentive-induced. It is well documented in the recent
analyses. There are other instances of black money generation that could be added to this group.
For example, the present study has information on incentive-induced black money cases by
interviewing a cross section of people in the important metropolitan centres. Some of these are
given in the following.
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CONCLUSION
Parallel economy is a new threat for the Indian economy. In India parallel economy is
expanding very rapidly. Government of India introduced commissions under Kaldor, Wanchoo,
Rangnekar, Chopra, and Gupta for estimating black economy. There are many factors like
Controls and Licensing System, Higher Rates of Taxes, Ineffective Enforcement of Tax Laws,
Inflation, Funding of political parties etc. that influence its growth.
In India amount of black money are increasing continuously which badly impacts the
economic growth of the nation. Such money is a new challenge for Indian economy. Indian
economy is badly affected by black money as it is underestimating GDP, increasing inequality of
income, increasing illegal activities etc. Over the past 50 years, the government has at various
times announced several schemes offering opportunities to bring black money overboard but the
result are not so effective. Some of these schemes are: introducing the scheme of Special Bearer
Bonds, demonetizing high denomination currency notes, stringent raids and scheme of voluntary
disclosures. These instruments are expected to reduce the volume of the black economy.
In my opinion, there are three reasons why consumer protection is so poor in real estate:
Real Estate is a big money business. While 'cleaning up' the industry would be of enormous
benefit to consumers, it would not be in the best interests of many agents and other
how
to
improve
the
real
estate
industry
they
ask
people
who
represent real estate agents. They rarely ask people who represent consumers. The real estate
industry not only deceives consumers, it also deceives governments.
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Consumers lack knowledge. For many people, buying or selling a home is a once or twice in
a lifetime experience. Consumers must rely upon agents to give them advice. This costs them
thousands of dollars and much heartache. Also, many consumers never realize how much
they are losing. They do not know what goes on behind the scenes.
BIBLIOGRAPHY
BOOKS:
WEBSITES:
http://indianstrategicknowledgeonline.com/web/black%20economy.pdf
http://www.yourarticlelibrary.com/economics/what-is-the-meaning-of-the-parallel-
economy/2720/
https://black2whitemoney.wordpress.com/parallel-economy/
http://timesofindia.indiatimes.com/india/Parallel-economy-booms-but-hard-to-tell-how-
big-it-is/articleshow/8771206.cms
http://www.academia.edu/8719079/Simran_Morakhia_BBA_LLBHons_41_Parallel_Eco
nomy_generation_in_urban_real_estate_sector
http://www.realestateeconomywatch.com/2015/02/real-estate-markets-tiptoe-toward-
stability/
http://m.newshunt.com/india/english-newspapers/the-assam-tribune/news/black-moneyand-a-parallel-economy_35126893/986/c-in-l-english-n-theassam-ncat-news
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