“ In Ancient times our country,

INDIA, was popularly known as

“Golden Bird” because people of

our country were more civilised in

terms of coordination and co-

operation, worked in a very

enthusiastic & honest manner.

BLACK MONEYLet’s start with discussing what does Black Money mean?

Black

Money

▪ No specific Definition

▪ What is official is White Money and that unofficial, Black

Money

Black Money

Illegitimate SourcesSmuggling, Bribery,

Drugs,etc.

Legitimate Sources Tax Evasion

HISTORICAL

REASONSNow, let’s discuss the historical reasons for the accumulation of Black Money

Historical

Reasons

▪ Shortages during World War

▪ Faulty Taxation

▪ Redundant Control Measures

▪ Large Public Expenditure

CONDUITSThe main channels for the generation of Black Money

Conduits

For Black Money

▪ Hawala

▪ Economics of Gold

▪ Rising share of services

Sender Beneficiary

Hawala Broker A Hawala Broker B

Gives Passcode

Informs passcode by phone,etc.

Some other sources

Of Black Money

▪ Under-invoiced inventories

▪ Over-invoiced plant and equipment

▪ Informal sector activities including trade, films, production etc

▪ Illegal holding of precious metals, gem and jewellery

▪ Flight of capital for investments abroad

▪ Transfer activities (like secondary share market and real estate) and

buying of influence (bribe for work)

▪ Illegal activities like smuggling, drugs, prostitution, and crime

STATISTICSLet’s see some interesting statistics about Black Money..!!!

$510.29 BillionThe amount of Illicit outflows from India during the period 2004-2013.

178.04

180.71

191.77

209.22

226.67

418.54

510.29

528.44

1049.77

1392.28

0 200 400 600 800 1000 1200 1400 1600

Nigeria

Indonesia

Thailand

South Africa

Brazil

Malaysia

India

Mexico

Russian Federation

China

(In USD Billions)Source: Global Financial Integrity

Cumulative Illicit Flows

From Developing Countries, 2004-2013

Components of Illegal Income

A study by National Institute of Public Finance and Policy

Evasion of Personal Income

Tax48%

Under-reporting of Production

28%

Under-registration of

Immovable Property

18%

Other Factors6%

+VE SIDE EFFECTCan Black Money have a +ve Effect on an Economy??

The answer is a huge NO. But, luckily for our Indian Economy it had had some

positive side-effect.

Effect of

Subprime Crisis

0

20

40

60

80

100

120

0 1 2 3 4 5 6 7

House Value Vs Mortgage Value after Housing Bubble Burst

House Value Mortgage in India Mortgage in Other Countries

Steps in the

Right Direction

The importance of dealing with the

problem of Black Money has been

visible in the Government's agenda,

with the issue being mentioned during

the presentation of the Union Budget

too….

STEPS TO CURB

Curbing Black Money stashed

Overseas

Curbing Domestic Black

Money

Curbing

Black

Money

Stashed

Overseas

Important

Regulations

▪ The Foreign Exchange Management Act, 1999 (FEMA)

▪ The Prevention of Money Laundering Act, 2002 (PMLA)

Are the two important legislations enforced by Directorate General of

Economic Enforcement (ED).

Value of Assets confirmed by Adj. Authority

Under PMLA (Rs. In Crore)

960.77

325.98

1395.4

2150.8

0

500

1000

1500

2000

2500

<2012 2012-13 2013-14 2014-15

Amount

Recent

Developments

▪ The Black Money (Undisclosed Foreign Income and Assets) and

Imposition of Tax Act, 2015 was passed.

▪ Applicable to RORs

▪ Stringent Provisions introduced

▪ Safeguards are provided so that innocent are not harassed

Contd….

3 Month Compliance Window for Voluntary Disclosure

INR 41.64 BillionIncome/ Asset Disclosure

644Declarations

That’s a lot of Money!!!!Contd….

Recent

Developments

▪ Signing of FATCA with US

▪ Amendment of Mauritius Treaty

▪ Initiative for signing of Automatic Exchange of Information Treaty with

all major countries including Switzerland

▪ Initiatives under BEPS (Based Erosion and Profit Sharing) such as

country by country reporting

▪ PoEM ( Place of Effective Management), etc.

Curbing

Black

Money

Domestic

Curbing Black Money

Domestic

▪ Mandatory quoting of PAN

▪ Annual reporting for certain specified transactions through SFTRA

▪ Encouraging Cashless transactions

Disparity in growth of Cashless

Transactions and Infrastructure

64%

43%

28%

0%

10%

20%

30%

40%

50%

60%

70%

Debit Cards ATMs POS Machines

Growth

Growth

Income Declaration Scheme

2016

Rs.65,250 Cr

64,275 Declarants

Avg Rs.1 Cr

Per Declarant

Recent

Developments

▪ Financial Inclusion

▪ Benami Transaction(Prohibition) (Amendment) Bill

▪ Cost of tax compliance lesser than cost of taxation

Demonetisation of

Old Currency

“ A “BAD ATTITUDE” is like a flat

tire, You can’t get very far until you

“CHANGE” it…

Thanks!!