T.Y.B.COM | SEM 6 | Economics - Black Money | VNSGU скачать в хорошем качестве

T.Y.B.COM | SEM 6 | Economics - Black Money | VNSGU

Causes Of Black Money 1) Excessive and High Marginal Rate of Taxes The increase in taxes and duties compels some people to evade them. A mason or a carpenter earns about Rs. 150 per day in a city and Rs. 150 to Rs. 200 per day in the metropolitan areas. Even a good ‘gol-gappa’ seller or a pan shopkeeper earns more than Rs. 300 a day. Assuming that these people work for 300 days in a year, their income will exceed the prescribed income tax limit. And how many of these workers pay income tax? This was just an example. Tax evasion increases as the income increases. Thus tax evasion leads to black money and this black money is used to earn more black money by investing in certain selected sectors of trade and industry which again results in tax evasion 2) Control and Regulations Another cause of Black money is the price control policy of the government. In selecting commodities for control and in determining their prices, the government fails to take into account the elasticity’s involved in demand and supply. 3) Donation to Political Parties For funding politicians, even honest corporate houses have no option but to find ways to generate unaccounted-for money. Since the expenditure allowed by law for a candidate is limited and the companies are allowed to give up to 5 per cent of their profits as donations to political parties for elections, elections are generally financed by black money holders. These people expect political patronage and economic concessions which are obtained with the consent and the connivance of political elite in power in the form of artificial controls on commodities, laxity in the means of distribution, etc. All these methods create black money. 4) Expansion of Public Sector A large number of public sector projects have come into existence during planning period. Tenders are invited for these projects and most of the times approval is given arbitrarily by two bureaucrats and ministers concerned. Quite often project costs are raised artificially and many a transactions regarding various purchases are kept as guarded secrets. All this results into expansion of Black money. 5) Absence of tax on Agricultural Income The unwillingness of the rulers on political grounds to bring agricultural income in the ambit of income tax has also contributed to generation of black money. Big industrial houses, over the past few decades, have en­tered the agriculture sector in a big way by acquiring large farms, growing and producing nothing. The black money accrued from other sources is sought to be converted into white by showing it on the agricultural income account. Taxing agricultural income may help contain this phenomenon. 6) Moral Degradation Degradation of our ancient moral and ethical values may also be regarded as a cause for generation, expansion and widespread use of black money. #vnsgu #bcomsem6 #economics #himanshunandwani #blackmoney