Indian Black Money

Black money in India refers to money earned through the black market or illegal means, on which no income and other taxes have been paid or which is the earnings from unlawful activities such as graft, kickbacks, and sub ornament.

The overall amount of black money deposited in foreign banks by Indians is not yet known. Some reports claim a sum of US$1.06 trillion has been illegitimately invested in Switzerland-based banks. However, according to reports by the Swiss Bankers Association and the Government of Switzerland, these reports are fake and fictitious and the total amount held in all Swiss bank accounts by citizens of India is just around US$2 billion.

Some India-based corporate houses are into transfer mispricing, through under-invoicing exports and over-invoicing imports from states and provinces having lenient tax laws such as Singapore, UAE, and Hong Kong.

Therefore the promoters of the public limited firms who rarely hold over 10% of share capital, earn black money in overseas nations at the expense of majority shareholders and tax income to the government of India.

The snowballing illicit fiscal outflows from India hit US$ 452 billion as on 2008.

Politicians and political outfits’ corrupt top government officials and state-run institutions accept bribes and other financial favors from overseas conglomerates and siphon the money in tax haven nations for transferring to India when required.

Moreover, locally earned bribes, illegal funds, and collections are also routed to foreign countries through hawala channels for dodging Indian tax authorities and subsequent legal insinuations.

According to estimates by India Ratings and Research, the decision of the Narendra Modi-led NDA government to withdraw currency notes of Rs 500 and 1000 are expected to destroy illegal cash worth Rs 4 trillion or 12% of the black economy in India.