convert black money into white money


Black money is the money which is earned illegally or the money which is not declared for tax purpose. It is unrecorded, unaccounted and unreported money. There is no exact estimation as to how much black money exists in the country, but there are various estimations regarding it, that run into lakhs of crores. According to experts, only 5 to 6 per cent of black money is in the form of cash. A huge part of it is in the form of real estate, gold and other precious metals, shares, benami property, etc. Here, we will discuss how to convert black money into white money? We are for supporting Black Money. But you should be aware of it, so that no one can use it to generate Black Money.

Black money is generated because of unrealistic tax laws, control policy, inflation, political parties need cash funding during elections, the tax structure is so high that honest middle class cannot survive, etc. If the tax is low and public facilities (road, hospitals, transport, electricity, water, etc) are properly available people are ready to pay income tax willingly. Only 4 per cent of population files income tax returns, and out of those, only a small percentage pays income tax.

Black money has a negative impact on the country’s economy. People want to convert partly or fully their black money into white, and there are some legal as well as illegal ways doing it. Few are discussed below.

  1. Agriculture Income to convert black money into white money

Many black money converters show they generated income as agriculture income. Agriculture income is tax exempted. In order to show your income as agriculture income, you must possess agriculture land which is used for the purpose like a plantation, nursery, etc. and income generated through these activities. You can also take agriculture land on lease and show your money as income from farming on that land. But there are several conditions that have to be satisfied in order to claim agriculture income.

  1. Use Investment as a Vehicle to convert black money into white money

People can invest their black money in cash. They can purchase an insurance policy and pay a premium in cash. Many a time they pay the first premium by cheque and rest in cash. They can save in PPF account, tax saving mutual fund, fixed deposit etc. which are a safe source to secure your money. Another way is to buy gold from a local shop; you will get an invoice, keep that invoice and sell back gold when after a certain time period. That way you will have an invoice and at the same time your money back. Do not go to any reputed store as they will insist you to pay through cheque. You can also buy artwork or antique or painting.

  1. Taking Gift to convert black money into white money

It is one of the popular methods for converting black money into white. You take a gift from your relative or friend in the form of a cheque and hand him/her the same amount in cash. The occasion can be anything like birthday, marriage, marriage anniversary, or any other special occasion. You should see to it that your relative/friend has that amount that is being transacted in his bank account. Gifts received from relatives (as specified) are tax exempted. Prepare a gift deed of the transaction which will serve as proof of gift.

  1. Bogus Loan Entry to convert black money into white money

One of the ways people use to convert black money to white is showing bogus loan entry. In this case, people give black money to a friend or relative and take a cheque from them. A variant to this is people give repayment of the old loan by giving back in white money through cheque.

  1. Forming Trust and Doing Charity to convert black money into white money

People form a trust for social upliftment cause. The executive body consists of own people and many a time illiterate people are executive members like housemaid, driver, cook, security man etc. They get cash donation to trust as a charity. It seems like charity but is actually a conversion of black to white. This money so obtained by the trust is ploughed back to the head member in the form of a loan which is never repaid back.

  1. Receiving Cash Income from Profession to convert black money into white money

Another way of converting black money into white money is showing income in cash. The source of income in cash can be from tuition fee, professional fees, consultancy or commission.

  1. Sale of Jewellery etc. to convert black money into white money

Go to any known jeweller shop, hand him the black money that you want to convert. Get a cheque of the same amount (minus his commission and taxes). He will also give you a purchase bill showing you sold your personal jewellery or diamonds to him. Also, you need not to pay even capital gain tax on the amount.

  1. Deposit Cash in Your Family Member’s Account

First of all open saving bank account of every family member, trusted relatives and friends. Deposit INR 20,000/- (19900/- odd figure) cash in each account. By depositing amount below cash 20,000/-, you will not come in the radar of IT authorities. You can use this amount as a gift from them. If there are five members in your family then yearly you can convert nearly a lakh rupees black to white without any problem. This amount may seem trivial, but it can be used for investments in mutual funds, stocks, gold purchase etc. which in future will grow legally.

  1. Buy Real Estate to convert black money into white money

It is the sector where a huge amount of black money is parked. People use real estate deals to convert their black money to white. It is seen that many people do a fake deal, exchange money and then cancel these deals due to non-payment of money from the other party. You can purchase property in the name of your spouse, adult children. Also, you can also show rent income in their names once they have purchased home. Purchase prices can be inflated according to the need of the situation.

  1. Declare Black Money to Authorities to convert black money into white money

It is the best way of converting your black money to white. But, the easiest and simple way is to declare this money to Income Tax authorities and pay taxes along with penalty and convert them to white.

Those people who have businesses can give their employees advance salary of few months and deposit cash in their accounts.  Apart from these for daily use do not withdraw money from the bank. Use your black money for purchasing Kirana, vegetables, fruits, petrol, etc.

Please write in the comment section if you know other methods of converting black money into white money. So, it will help many middle-class Indians who want to convert black money into white money and relieve the tension and stress it gives.

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