Monday, 18 July 2022

Measures taken to tackle black money:

 Measures taken to tackle black money:

A Herculean effort has been made by the Central Government to combat the menace of black money, including the introduction of new legislation as well as amendments to previously enacted legislation. Some of the initiatives taken by the government are discussed in greater detail below.

Demonetization is the act of depriving a currency unit of its legal tender status by removing it from circulation. It is necessary to remove currency from circulation in order to ambush black market currency and unaccounted money, which is referred to as demonetization. Demonetization attempts in the past have failed miserably, with less than 15 percent of high-value currency notes being exchanged and more than 85 percent of high-value currencies remaining unchanged because the owners feared they would be subjected to criminal prosecution by government agencies.


Apart from the disappointing results obtained on the two occasions when it has been implemented, there are several other compelling arguments against the effectiveness of this measure in combating black income generation. First and foremost, the measure is restricted to the imposition of fines on those who are in possession of their black wealth in the form of cash at the time of demonetization. First and foremost, for those who prefer to keep their money in cash, there are avenues for converting high denomination notes into lower valued ones at a discount by way of intermediaries.


In a third and perhaps most important way, the measure fails to address the root causes of black income generation, which are not addressed. In this way, the generation of such incomes can continue unabated in the future, provided that proper precautions are taken regarding the form in which unspent black incomes are held. The one-time penalty imposed by demonetization only serves to raise everyone's awareness of their responsibilities in the future, and it does nothing to alter the incentives that lead to the generation of black incomes. There will undoubtedly be a temporary halt in the conduct of illegal activities, given that cash is the primary mode of payment used in such transactions. The important thing to remember is that the dislocation is only temporary.


Raids: The powers of the Income Tax Department should be significantly expanded, and it should be given the authority to conduct raids on the premises and properties of taxpayers or any other individuals, seize unaccounted income and wealth, and bring legal action against those who violate the tax laws.


Linking Aadhaar to Pan for the purpose of filing income tax returns and accessing bank accounts:

The Aadhaar Card is now required in a variety of situations, including registering for a SIM card, opening a bank account, and filing income tax returns, among others. The government's recent decision to link Aadhaar to PAN for the purpose of filing income tax returns is mandatory because it will aid the authorities in their efforts to track down tax evaders and identify them.


The Aadhaar and PAN details would assist officials in determining whether or not the taxpayer is complying with the requirement to file an ITR. In the same vein, linking Aadhaar numbers to bank accounts is also required by law. This will make it easier for officials to keep track of all of the digital transactions, transfers, and other activities.

Act on the Prohibition of Money Laundering (Prevention of Money Laundering Act, 2002):

Preventing money laundering and providing for the confiscation of property derived from, or involved in, money laundering, as well as for matters connected with or incidental to money laundering were the goals of the Prevention of Money Laundering Act 2002 (PMLA). The Act also addressed international obligations under the Political Declaration and Global Programme of Action for the Prevention of Money Laundering, which were adopted by the General Assembly of the United Nations in order to combat money laundering. According to the Act, anyone found guilty of money laundering is subject to a sentence of rigorous imprisonment ranging from three years to seven years. He could also face a fine of up to Rupees five lakhs if he is found guilty.

The Benami Transaction (Prohibition) Act of 1988 prohibits the sale of a loan in exchange for a gift.

Benami is a Persian language word that literally translates as "without a name" or "without a name." The term "real beneficiary" is used in this Act to describe a transaction in which the real beneficiary is not the person who purchases the property in question. Therefore, the person in whose name the property is purchased serves only as a front for the true beneficiary of the property purchase.

In accordance with the Benami Transactions (Prohibition) Act, 1988, it is unlawful to hold property that is "benami" or not in the name of a person who purchased the property.


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