10 Ways to Convert Black Money to White Money
Nowadays, converting black money to white is very common. Black money is unrecorded, unreported, and unaccounted money that is earned through illegal activities on which tax has not been paid. Most of the black money income is received in cash and that is not shown in the books and not disclosed to the government for tax purposes.
According to experts, black money is in the form of cash is only 5-6 percent. It is not possible to estimate how black money is in the country. But a lot of black money is in the form of real estate, gold, precious metals, shares, etc.
This write-up does not encourage any taxpayers or anyone to use the below methods to the conversion of black money to white. This article is just to let individuals know about what others do to convert their black money to white. So, let’s understand the ways for conversion of black money to white.
From Where Black Money is Generated?
One question definitely comes to your mind is, how is the black money generated? Well, there are many sources where black money gets generated. Most of them are the Sale of property, corruption, Sale of goods without having an Invoice, Providing services without an invoice, etc.
10 Ways For Converting Black Money to White
People are worried about paying higher tax so they opt for converting the black money to white. Below are the ways of converting black money to white are as follows:
1 Income from Agriculture
It is the popular way of converting black money to white by showing income as agriculture income, but you must have agriculture land and if not then you can take on lease which is used for the purpose such as nursery and plantation, etc. To claim agriculture income you need to have satisfied several conditions. The agriculture income is not taxable in countries like India and this method only works in those countries where the agriculture tax is exempted.
2 Bogus Loan Entry
Bogus loan entry is another popular way the converters used to turn black money to white. Modus operandi under this case, people can offer back black money to their friend or relative and get a cheque from them while in some cases, people give a repayment of this loan by providing back cheque.The Income tax department keeps an eye on every transaction and the taxpayers have to prove the genuineness of every transaction.
3 By Real Estate
A lot of people use this method for the conversion of black money to white and also it is observed that they do fake real estate deals then exchange money and further cancel these deals due to non-payment of the amount from the other party. They also purchase the property in the name of their adult children and spouse and once the house is purchased then show the income as rent.
4 Giving Money to Family Members
Another method for converting black money to white is to gift money to all the family members by depositing money in their bank accounts. Ensure that the bank accounts of all the family members have saving bank accounts and later you can use that money as a gift from them. If you deposit small amounts in their bank account it would save you from the eye of IT authorities.
5 Sale of Jewellery
Go to a known jewellery shop and give them all the money that you want to convert after that, you will get a cheque from them for the same amount. They give you a purchase bill as proof that you sold your personal jewellery. In this way, one can convert the black money to white money. So there is no need to pay capital gain tax.
6 Received Gift from Relatives
This is another and popular way to convert black money to white. In this way, you will receive a gift from relatives. Modus operandi is very simple: you have black money and your relatives have the same amount of white money so you take a gift from your relative in the form of a cheque and you will give them your black money. Getting a gift from relatives is tax exempted.
7 Forming Trust and Doing Charity
It is a way used by people to convert black money to white is formulate a trust for social upliftment cause. They usually make executive bodies of their own people like cooks, drivers, housemaids, etc, And donate black money to convert into white money. They take charity in the form of cash.
8 Receiving Cash from Profession
Another popular way used by people to convert back money to white is by showing income received from professions like tuition, consultancy or commission, professional fees, etc.
9 Converting Black Money by Investment
It is one of the best ways to convert black money to white by making investments in cash. There are various ways to invest money and save tax.
People purchase insurance policies and pay premiums in cash. They can invest and save money in fixed deposits, PPF accounts, and tax-saving mutual funds, all the safe sources to secure money.
10 By Declaring Black Money to Authorities
This is often one of the best ways to convert black money to white is by declaring the black money to Income Tax authorities. And paying tax on this money to convert into white. All the above ways are ethical ways to convert black money to white but this is the simple and easiest method that you should consider.
The objective of this article is just to expose the ways of converting black money to white. The above methods are not the recommendations for converting black money to white. This article is just for awareness regarding false practices.