Define Black Money
Black Money refers to a sum of money that is unaccounted i.e. we have not declared it to the legal authorities. Black money is generated through illegitimate activities not permitted under law like criminal and corruption.
In simple words, Black money is something that refers to a whole range of activities undertaken illegally or to avoid taxes.
Factors leading to Black money
- One of the main reasons for the creation of black money is illegal activities like crime related to smuggling, drugs trade, robbery, kidnapping, financial fraud, corruption involving bribery. Leakage from government spending also leads to the creation of black money.
- Cultural and social Factor – Society, where tax evasion and Under-reporting is considered to be normal, will witness a large presence of black money.
- Also, countries with poor implementation of Regulations also face higher levels of black money.