BLACK MONEY ESSAY – 3 (600 WORDS)

BLACK MONEY ESSAY – 3 (600 WORDS)

Introduction

People earn money from different sources and do not bring it to notice so that they can refrain from paying tax. This accumulation of money on which tax is not paid is known as black money. The problem of black money has been prevalent in our country since long. There are a number of factors that contribute to this problem.

Causes of Black Money

Here is a look at the various causes that lead to the problem of black money in India:

1. High Tax Rate

The rate of tax in India is quite high. The increase in the taxes and duties has forced people to take the route to illegal wealth accumulation. Tax free income limit in the country is just Rs. 25,000/-. This amount is not sufficient to run a household these days when the cost of living is sky high. This is the reason why professionals who earn more tend to hide their income so that they don’t have to pay tax.

2. Price Control Policy

The prices of certain commodities such as fertilizers, sugar, cement, etc are regulated by the government by way of its Price Control Policy. The policy is rigid and does not go by the ups and downs in the market. The private manufacturers and retailers take advantage of this policy that results in black money.

3. Different Excise Duty Rates

The government has set different rates for excise duty based on the quality of products. In order to avoid paying higher rate of excise duty, the manufacturers at times downgrade a product. This leads to the generation of black money.

4. Real Estate Transactions

Real estate transactions involve huge amount of money. People accumulate black money via real estate transactions. Purchasing property at a cheaper rate and selling it when the prices rise has become a lucrative business and a lot of black money is generated with this.

5. Quota System

The government has set a certain quota for export, import and foreign exchange. While this is set for the benefit of the people it is often misused to accumulate black money.

6. Inflation

High inflation rate is also known to be one of the causes of black money.

Impact of Black Money

Black money does not only have a negative impact on the country’s economic condition but also has adverse social consequences. It creates economic disparity in the country which undoubtedly is the basis of social disparity. Such practices are the reason why the rich here are getting richer and the poor are getting poorer. Social inequality leads to frustration among people and gives rise to crimes such as robbery, bribery and more.

Tax evasion also means the amount that could have been used for the country’s growth and development did not reach the government. If the government does not get enough revenue it would be unable to take up new projects for the development of the country and the uplift of the poor sections.

The countries where people pay taxes religiously are far better off as compared to those where there is huge amount of accumulation of black money.

Conclusion

The government has taken certain steps to eradicate the issue of black money. The recent and one of the major steps taken in this direction was demonetization. While this step helped in eliminating black money to some extent many people condemned it. However, even if it helped, it definitely was not enough. A lot more needs to be done in order to stop this ill practice. The government must look for more effective measures to curb this problem. And remember, the government alone cannot bring this issue to an end. It can only be curbed if each and every citizen of the country contributes his bit.