Question

What is black money? Write the causes of black money

Answer 1

Black money is funds earned in the black market on which income and other taxes have not been paid.

Cause of Black money:

 

1. Shortage of goods: Even if it is shortage occurring naturally or created artificially, it is the root cause of black money.
2. Licensing proceeding: Permit, quota, license all these are associated with maldistribution of commodities in short supply which results in black money.
3. Contribution of the Industrial sector: For example, the controller of public limited companies tries to buy commodities at lower prices and bill them at high amount and the balance goes to them personally.
4. Smuggling: Precious metals like gold and silver, electronic goods, textiles were levied heavy excise duty. To avoid paying these duties, smuggling is done illegally which results in black money.
5. Tax structure: When tax rates are high, tax evasion naturally arises that leads to generation of black money.