How to convert black money into white money
Are you suffering black money issues? here is a 8 best tips to converting black money into white.
Indians are frantically looking to rid themselves of so called “black money” as the government cracks down on corruption and tax evasion.
India Prime Minister Narendra Modi announced that 500 and 1,000 rupee notes must be deposited at banks and post offices by the end of December. An initial announcement that people only had a few hours to spend the bills before they were abolished sent people into a frenzy until the government clarified they would allow a more gradual conversion.
The 500 and 1,000 rupee notes, equal to $7 USD and $15 USD, are Indian’s highest denomination notes and very common. They were only to be accepted by hospitals, railway stations, airports and fuel stations until November 11.
The changes are part of the government’s push against tax evaded income called black money. Most of black money is income that people received in cash but didn’t account for when it comes to taxes. It could be earned from selling property, goods or services without an invoice, from letting people split the payment for things between cash and checks and only accounting for the checks, or from corruption and other illegal activities.
The government is releasing new 2,000 and 500 rupee notes with new security features in an attempt to thwart counterfeiters. A new 1,000 rupee note with a new design and dimension will eventually be released.
The announcement has people searching for ways to convert black money into white money. This has become the biggest search topic in India in recent days. Here’s how people are converting their black money into white money as they scramble to avoid increased taxes and losing their money. It’s meant as informational and not as suggestions.
How to convert black money into white money
Tips #1: Showing income as agricultural income
Agricultural income in India is not taxable. People are finding ways to claim their land or ancestors’ land is used for agricultural purposes then claiming their income is non-taxable because it comes from agriculture. However they may have to meet certain requirements to do so.
Tips #2: Gifts from friends and relatives
You don’t have to claim money received from relatives as a gift when you report your income tax. Many people are taking advantage of that and claiming their black money as gifts received by relatives.
If you claim money as gifts from non-relatives and friends you have to pay income tax, but this is a way to explain how you got the money.
Tips #3: Deposit less than 50,000 rupees in banks at a time
Many deposits under 50,000 rupees aren’t noticed by the income tax department. However, if you deposit more than 50,000 rupees you have to give the bank your PAN details. Therefore many people are opening more than one bank account and depositing up to 50,000 rupees at a time.
Some families also open a bank account in each family member’s name.
Tips #4: Sell personal belongings like jewelry
People have gone to jewelers and given them the black money they want to convert. The jeweler writes a purchase bill claiming he bought personal jewelry from them and gives them a cheque for the black money minus a percentage he keeps for himself.
Tips #5: Investing black money in insurance
Some people have bought insurance policies and paid the premium in cash. They may pay the first premium with a cheque then the rest of the premium in cash. People who buy insurance policies aren’t required to show all their premiums and the maturity on the premiums is tax-free.
Tips #6: Real estate transfers
One way people are converting black money is through land sales. A seller accepts a cheque from a buyer for more than the seller’s asking for the land then giving the difference between the asking price and the original price back to the buyer.
Tips #7: Hawala transactions
There’s something called a hawala transaction through which someone in India identifies a hawala agent who takes the money and gives it to his partner in another country who then spends it in India as a foreign direct investment or seed money for a private company. He may also invest the money abroad in properties or shares.
Tips #8: Showing fake sales
Businessmen have claimed sales they haven’t made and logged them onto their books to claim that’s how they got the money. There are various ways this is done.
Many would also suggest just declaring the black money and paying the tax to authorities. This way you can just deposit it, get the white money and not have to worry about it.
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