Many shades of black money - Hindustan Times
A lowdown on how India’s black economy deals thrive outside the financial system by creating a web of transactions that obscure the sources of slush funds.
What is black money?
Black money is income on which tax is evaded. It represents a large part of a bustling 

economy where transactions are carried out in cash circumventing banking channels.

What is the size of India’s black economy? 
Finance minister P Chidambaram is likely to reveal a new estimate of India’s unaccounted “black money”, most of it stashed abroad, in this year’s budget session and follow it up with a plan to hold it to account.

Black money not just from corruption & tax evasion - Kashmir Times

Counterfeit currency, goods and medicines hurt economies and finance terrorists

Why Realty Sector Contributes To Black Money In India?

By SiliconIndia   |   Wednesday, December 19, 2012   

Bangalore: In a recent Corruption Perceptions Index (CPI) 2012 survey, out of 176 countries, India ranked 94, which is even worse than China and Brazil. Corruption prevails in the real estate segment too. Corruption has become an unresolved issue in India that has been spread throughout the country like a deadly plague hindering the country’s growth. There have been many corruption cases that made headlines and caught our attention because of its illegal money involvement.

Below are few reasons why the land in India attracts lots of black money, reports Alam Srinivas from BBC News.

1) Mismatch in the equation: demand and supply

In India, the rate of urban housing shortage has decreased since 2007 but still, a quarter needs housing, according to the report of the Technical Group on Urban Housing Shortage.

The report showed that Indian cities are falling short of around 18.8 million homes. Alternatively, the current housing shortage scenario has improved in comparison with 24.7 million in 2007 which was recorded by the same group.

India's uphill battle against 'black money' in real estate

Ulwe, a village of dusty, uneven streets on the outskirts of Mumbai, lacks basic amenities like water supply and electricity, but a two-bedroom, 1,000 sq ft house costs about Rs 50 lakhs, beyond the reach of many middle-class Indians.

Ulwe, a village of dusty, uneven streets on the outskirts of Mumbai, lacks basic amenities like water supply and electricity, but a two-bedroom, 1,000 sq ft house costs about Rs 50 lakhs, beyond the reach of many middle-class Indians.

According to prospective buyers, many developers will demand up to 30 percent of that price in cash, a small slice of the ubiquitous, unaccounted "black money" that costs India's straitened exchequer billions of dollars in lost taxable income.

Legislation that would bring more transparency to the industry will be considered during the winter session of India's parliament, which starts on Thursday.

Also Read: Realty spots that can give 91-145% returns in 5 yrs: Survey

However, investors, tax officials and bankers Reuters spoke with were sceptical the law would stamp out illegal practices they say are closely entwined with politics.

"Four out of 10 developers were ready to do it in full white and six were asking for a black component," said 35-year-old Umesh Kolhapure, who was looking for a three-bedroom house around Ulwe, near the proposed site of a new international airport serving the country's financial capital.

Recent high-profile scandals in the coal and telecoms sectors involving large corporate houses and politicians have rattled investors in Asia's third-largest economy, where undeclared wealth has long been rampant.

Real estate accounts for a large share of illicit transactions, thanks to lax regulation and the numerous approvals needed for projects, making many ordinary people party to corruption and pricing some of the emerging middle class out of the market.

That has prompted the newly-appointed housing minister, Ajay Maken, to push a real estate regulation bill.

Designed to bring greater accountability, transparency and prevent fraud and delay, the bill proposes appointing the sector's first national regulator. However, it will not have control over land deals, which is where illicit activity is widely believed to be rampant.

Black money hurts economy: Advani at UN

Wednesday Oct 10, 2012

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United Nations, Oct 10 — Noting that black money debilitates the economy limiting growth and investment in productive sectors, India has called for a war on corruption and transparency and accountability in governments.

"While this problem afflicts both developing and developed world, its consequences are more severely felt in the developing countries where it undermines the delivery of services and impact the people directly," Bharatiya Janata Party leader Lal Krishna Advani told a UN panel Tuesday, reading out a prepared official speech as an Indian delegate.

Opposition leaders are often asked by the government of the day to lead Indian delegations to various UN forums and read out texts prepared by the foreign ministry.

Read more: http://india.nydailynews.com/politicsarticle/06df63036afe7582f8b64cae4fa5f238/black-money-hurts-economy-advani-at-un#ixzz29CdSBl8D

E-payment system likely to curb black money

October 08, 2012 09:38 IST

The government might be finding the Vijay Kelkar panel's recommendations on subsidy reduction too hot to handle but it is eager to implement the committee's suggestions on curbing the cash economy to counter black money.

According to a senior finance ministry official, Finance Minister P Chidambaram [ Images ] is in favour of launching a systematic plan to counter black money through extension of electronic payment systems through the country, especially covering all government transactions.

The official said officials had already started work on the minister's views on the Kelkar panel's various recommendations, and a meeting under Economic Affairs Secretary Arvind Mayaram in this regard took place on Friday.

He added that besides concretisation and implementation of an electronic payment system across the board in government transactions, including tax collection and expenditure, important measures to curtail use of unaccounted cash in the subsequent elections were in the offing.

The Kelkar committee said: "The movement towards electronic payments for all government transactions, and a general reduction in the usage of cash in the economy will help transition from the informal economy to the formal economy. This will help curb corruption, increase transparency and accountability."

It has pointed out an efficient and ubiquitous large and small value electronic payment system throughout the country would make it possible for the Centre to accurately predict and collect revenues on the one hand, while managing expenditure efficiently on the other.

Corruption to blame for black money: CBDT panel

By KR Sudhaman Aug 15 2012 , New Delhi

Tags: black money, CBDT, Corruption, Economy

SQUARELY blaming the large scale corruption in every sphere of activity and electrol politics 

RELATED ARTICLES Black money: Export, import firms under DRI scanner No amnesty scheme to check black money: Govt

for black money in India, a CBDT committee report released on Tuesday said the menace could not be checked merely through legislation or enforcement but in “finding much deeper socio-economic solutions.

There are two dimensions of the issue of black money –– first, its generation and, second, its consumption and use, including laundering of black money back to mainstream economy.

Black money: Public wants demonetising of high-value note

NEW DELHI: The common man wants the government to demonetise high denomination currency notes like Rs 1,000 and Rs 500 to effectively combat the menace of black money in the country, a Finance Ministry report has revealed.

The other salient demands by the public include bringing a voluntary disclosure scheme for black money hoarders and bringing a strong Lokpal Bill.

Use of black money in polls root cause of corruption: CM

BHOPAL: A day after BJP national president Nitin Gadkari announced the party's full support to yoga guru Baba Ramdev for his crusade against black money, chief minister of Madhya Pradesh Shivraj Singh Chouhan made a statement that made heads turn on Independence Day.

Addressing the Independence-Day march past at the Lal Parade Grounds here, Chouhan said that "use of black money in elections is the root cause of corruption."

Real estate, election campaigns routing black money: Report

PTI Aug 5, 2012, 10.42AM IST

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NEW DELHI: Money generated through illegal means is laundered through various means, including real estate andelection campaigns, in India, a report of the US State Department has said.

"High-level corruption both generates and conceals criminal proceeds. Illicit funds are often laundered through real estate, educational programs, charities, and election campaigns. Companies use trade-based money laundering to evade capital controls," the International Narcotics Control Strategy Report 2012 has said.

The report, which was published in March this year covering 2011, noted that India is a significant target for both domestic and foreign terrorist groups.

The report mentioned that about 86 lakh counter terrorist financing (CTR) and 20,698 Suspicious Transaction Report (STR) were reported between April 2010 to March 2011.

India is a regional financial centre, with a rapidly growing economy and well-developed formal and informal financial systems. "India's extensive informal economy and remittance systems, porous borders, persistent corruption, and onerous tax administration and currency controls contribute to its vulnerability to economic crimes (including fraud, cyber crime, and identity theft), money laundering, and terrorist financing," it said.

According to the report, tax avoidance and the proceeds of economic crimes are the mainstays of money launderers in India, but laundered funds are also derived from narcotics trafficking and trafficking in persons, trans-national organised crime, illegal trade and corruption.

Baba Ramdev to fight against graft, black money from August 9

Ahmedabad , Sun, 29 Jul 2012ANI

Ahmedabad, July 29 (ANI): Yoga guru Baba Ramdev on Sunday announced that he would begin a decisive fight against graft next month for the retrieval of illicit funds stashed in bank accounts abroad.

Speaking here on the occasion of a sermon by Jain ascetic Tarun Sagar, Baba Ramdev said the movement would reach its crescendo by Independence Day.

"Now, we have to bring back 400 trillion rupees' worth of black money, eradicate corruption, save democracy and the country. The happiness I see on your faces today has to be brought on the faces of our 1.2 billion people. This struggle shall begin in Delhi on August 9, and will reach its climax by August 15," Baba Ramdev said.

Also present on the occasion was Gujarat Chief Minister Narendra Modi, who said that it was unfortunate that the motives of people like Baba Ramdev were questioned when they tried to initiate social movements in the interest of the nation.

"Today, if ascetics are grieved by the pains of society, and if they talk on social issues, if they try to raise public awareness by taking the nation's benefit as a duty unto themselves, then the misfortune of my country is that those who criticized hermits for being detached from the society, now curse them for being involved with it," Modi said.

Baba Ramdev is poised for a joint movement along with anti-graft crusader Anna Hazare against corruption, which they are scheduled to start from August 9 onwards.

Baba Ramdev dares UPA govt on black money issue

 

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Ahmedabad: Baba Ramdev, who was here on Saturday to mobilize support for his August 9 protest, said if Congress did not act on the issue of bringing back black money, he would ask people not to vote for it. Ramdev is planning to launch an agitation from August 9 at Delhi's Jantar Mantar against Congress-led UPA government's failure to bring back the black money from foreign banks.

He said that he would give Congress party the opportunity to take action to bring back the black money, but if it failed, he would ask the people not to vote for Congress party.

"In the elections in five states, people have shown the ruling party that they will not tolerate corrupt people in power. This time we will give specific instruction to people that they should not vote for this particular party as it is not interested in bringing back the black money, removing corruption and saving the country," Ramdev said.

"The government is thinking that low turnout at Team Anna Hazare's fast venue means that it can continue with its corrupt ways. But I say this government should not underestimate any public agitation," Ramdev said.

"The month of August will be crucial as a crowd of 2 lakh will turn up for my agitation and I don't know what will be government's reaction."

Intel agencies to probe black money transactions

New Delhi, July 29, 2012, PTI:

 Over 1,100 financial transactions of firms and individuals during the last fiscal are under the scanner of intelligence agencies for alleged money laundering and black money dealings.

A total of 1,130 Suspicious Transactions Reports (STRs), the highest in the last six years, was passed on to the Central Board of Excise and Customs and its two key intelligence units Directorate of Revenue Intelligence (DRI) and Directorate General of Central Excise Intelligence (DGCEI) during 2011-12 by the Financial Intelligence Unit (FIU), of the Finance Ministry.

Sources said the STRs shared by FIU-IND were mainly related to tax evasion and money laundering.

“The STRs given by the financial intelligence unit are being looked into. We have also sought relevant details from the banks and firms involved in it,” a senior DRI official said.

A total of 121 STRs were shared by the FIU during 2010-11, 96 during 2009-10.

Hinduja also highlighted the challenge faced by India from

PTI | 12:07 PM,Jul 22,2012

the menace of corruption and black money. "The main causes of generation of black money have been the requirement for funds to meet the expenses of political parties and to fight elections at local/state/national levels; the need for making illicit payments to secure government contracts and influence government policies etc," he said. "This is a cancer which must be addressed. Unstructured, non-institutional political funding is the root of corruption in India. Electoral reforms may be introduced to regularise and make political parties accountable for funds received," he said. He also said that state funding of political parties' election expenditure can be part of a large scheme of political, electoral and taxation reform to stop the flow of money into parallel economy. He pointed out that many developed countries have opted for 20-30 per cent tax to make black money stashed abroad accountable. "India could also consider entering into similar agreements with foreign countries so that the unaccounted wealth abroad can come to India and taxed. Such funds could help reduce India's burgeoning fiscal deficit," he said. PTI AKJ

Is the Benami Bill targeted at corruption and black money futile?
Did you know that a law exists, and has existed for 24 years, which declares benami transactions illegal? Benami transactions((benami literally means 'without a name'), where property is paid for by person A, but held in the name of person B (who may not even exist) have long been part of the way business is done, or commerce is conducted, in India.

BRP Bhaskar: Black money is piling up
Exclusive to The Gulf Today There was a spurt in money stashed by Indians in secret accounts in Switzerland last year. The last time a big jump occurred was in 2006. The gap of five years is significant. According to Swiss bank data, Indian deposits increased by one million Swiss francs in 2006 to touch a peak of 6.5 billion francs (about Rs400 billion). Thereafter the deposits started falling and were as low as about Rs93 billion at the end of 2010. Last year fresh inflow of funds raised the total to Rs127 billion. It is not unreasonable to draw a link between the swelling of Swiss bank deposits and national and state elections in India, normally held at intervals of five years. The fall in deposits since 2006 can then be explained in terms of repatriation of funds to meet the expenses of the elections of the last five years, including the parliamentary poll of 2009. And the recent spurt can be seen as part of the preparations for the upcoming elections, including the Lok Sabha poll due in 2014. The Association for Democratic Rights, a non-governmental organisation monitoring election malpractices, estimated that campaign expenses during a five-year period could be anywhere between Rs350 billion and Rs810 billion. It reckoned that one-fourth of the estimated Rs100 billion spent during the 2009 Lok Sabha poll was black money.

Blame red tape for black money

S. SHANKER

Innumerable approvals are breeding grounds for corruption.

Developers in Mumbai say single-window clearance could reduce apartment costs by a quarter.

Probably the first signs of introspection among them, developers saddled with high inventories and shrinking sales over the last 18 months called for reforms to end ‘licence raj.'

Developers have joined the crusade against black money and corruption and said the cost of apartments sold in Mumbai could easily be lower by 25 per cent. For this to happen, a single-window clearance needs to be put in place, instead of the 49 departments and over 150 persons that give approvals at present.

“Any delay at any stage obviously gives rise to greasing of palms as developers are anxious to complete their project,” said Mr Lalit Kumar Jain, National President, Confederation of Real Estate Developers' Association of India.

COST OF APPROVAL

A Mumbai developer said on average he pays Rs 3 crore a year for project approvals.

The Maharashtra Chamber of Housing Industry has over 1,000 members involved in developing projects worth over Rs 1 lakh crore in the city and its suburbs.

Mr Jain said that a McKinsey report to the Government of India on the cost of approval pointed out that the cost could constitute up to 40 per cent of the sale value.

Excessive regulation is the prime cause of project delays and innumerable approval/sanctions are fertile breeding grounds for corruption and black money transactions, he said.

Legalising black money

Does it serve the greater good?

The debate over allowing or disallowing of whitening of undisclosed sums of money is a strong one. The proposed provision for legalising moneys that is off the books envisages a payment of a flat penalty @10 percent. This facility of making black money white is likely to take effect in the next fiscal despite strong reservations of the various bodies representing the business community. The reasons for such opposition are obvious.

On the one hand the government is pressing ahead with widening the tax net and encouraging people and commercial entities to pay what is due to deepen the State's coffers; simultaneously it is extending the scope for legalising income generated illegally. The latest move is bound to send mixed signals to those who remain outside the tax brackets for it smells of double standards. Furthermore, how exactly does the government intend to legalise ill-gotten money when it is signatory to international anti-money laundering statutes remains to be seen. The fact that such undisclosed sums are commonly associated with corruption, crime or other illegal activities is not lost on anyone. More importantly, granting of such facility year after year encourages, even the otherwise honest tax payer to reconsider paying taxes. When one may 'whiten' one's money at a flat rate of 10 percent as opposed to the multi-layered tax slabs that exist under the tax laws, does it not make more sense to go with the latter?

Reforms needed to check corruption in real estate: CREDAI

Mumbai: The Confederation of Real Estate Developers' Association of India (CREDAI) on Tuesday said there was a need for comprehensive reforms to check black money and corruption in the realty sector.

"There is a need for all round reforms to end corruption and check black money in realty," CREDAI National President Lalit Kumar Jain told reporters here.

He said that CREDAI has been advocating for single window system for project clearances to cut down time and chance for corruption.

CREDAI has sought reforms in four key areas including administration, land, taxation and banking, which impact the real estate.

"There has been a lot of talk on this, but no action. We too hate the system that labels us as crooks and breeders of black money. There is a need to realise that the various bottlenecks at government level at Centre and in several states are equally responsible for this menace," he said.

Govt moots one-time tax amnesty to recover black money stashed abroad

TNN | May 22, 2012, 12.37AM IST

Government’s white paper on black money tabled in Parliament on Monday listed a one-time tax amnesty to recover funds stashed abroad and a gold deposit scheme for locals as possible ways to deal with the menace.

NEW DELHI: The government's white paper on black money, tabled in Parliament on Monday, listed a one-time tax amnesty to recover funds stashed abroad and a gold deposit scheme for locals as possible ways to deal with the menace, while suggesting that individuals get the tax department's go-ahead for all property deals and face undue scrutiny on cash in their possession.


It also called for setting up of independent regulators, ombudsmen for allocation of natural resources, as well as Lokpal and Lokayuktas.

The document has been prepared in response to the clamour for crackdown on corruption and unaccounted wealth, and is supposed to help the government counter the perception of inaction that has bruised it politically. However, in its anxiety to appear tough, the government tilted towards prescriptions which can set the clock back on tax reforms and result in harassment of honest taxpayers.