Understanding the Invisible Hand: How Black Money is Converted to White

While it is important to discuss ethical and legal practices, this article aims to provide an understanding of the mechanics behind the conversion of illegal money to legal money in India, particularly focusing on agricultural income and startup companies. Please note that this information is for awareness and educational purposes only.

Agricultural Income and Sneaky Agricultural Practices

Rich politicians and others with vast land holdings often convert illegal money to legal money through agriculture. This is achieved by purchasing crops directly from small marginal farmers at a premium price and then selling these crops to government agencies under the guise of being grown on their own lands. This false declaration results in non-taxable payments, which are essentially black money converted into legal white money.

Using Startups and Company Registration for the Legalization of Black Money

Another common method is to register a startup product and start showing false sales. Since Indian startups are not required to pay taxes for the first five years, all profits can be retained. By depositing illegal money into a registered company and then treating it as legal profits, the tax evasion can be effectively executed.

Fair Warning: Awareness is Key for Ethical Tax Practices

It is important to understand these practices as part of societal and governmental awareness. This knowledge helps in combatting tax evasion and promotes ethical financial practices. The term “chartered accountants” is used in this context to describe professionals who facilitate such activities.

How Chartered Accountants Facilitate This Cycle of Black Money

Chartered accountants in India often have two sets of teeth: one for auditing and another for tax evasion. They create fake bills, issue loans, and use entry companies to manipulate financial records. Many of these practices are unethical and illegal, but they are deeply ingrained in the system.

Methods and Tactics of Tax Evasion

Steps to facilitate tax evasion include:

Issuing fake bills and receipts.

Generating loans from SPVs and NBFCs.

Opening and managing entry companies.

Exchanging old currency notes for new ones through bribes.

Creating a nested network of accountants who work together to manipulate financial records.

Using tie-ups with post offices, insurance companies, and banks.

Ensuring compliance with tax benefits through retail transactions.

Measures like discontinuing high denomination notes and promoting mobile payments.

Conclusion: A Call to Action

While it is crucial to be aware of these practices, it is equally important to recognize that not every chartered accountant is engaged in unethical practices. Ethical practices and fair tax policies are essential for sustainable economic growth. It is time to bring about change and ensure that the system is transparent and accountable.

We must work together to build an India that our grandfathers fought for. By sharing knowledge, implementing better tax policies, and holding accountable those who misuse their positions, we can create a more equitable and prosperous society.

Note: This article provides a factual account of the mechanisms behind tax evasion in India. It is intended for awareness and educational purposes. Always seek professional advice when dealing with financial matters.