The Game of Black Money | #FinancialEducation

Summary

This video script delves into the concept of 'black money,' explaining it as income on which taxes have not been paid, contrasting it with 'white money' that is declared and taxed. It discusses the reasons why businesses might engage in tax evasion, the impact on government revenue, and the broader economy. The speaker illustrates the mechanics of black money through the narrative of 'Lala Ji,' a businessman, and explores the government's efforts to curb it, including demonetization and the introduction of GST. The script also touches on the complexities of money laundering and the challenges in tracking and controlling such illicit financial flows.

Takeaways

• 💡 Black money refers to income on which no taxes have been paid, contrasting with white money, which is income that has been declared and taxed.
• 🏦 Taxes, both direct (like income tax) and indirect (like GST), are essential for funding government projects such as hospitals, schools, and infrastructure.
• 💼 High tax rates on business profits can incentivize tax evasion, as business owners may find it difficult to pay the required taxes and still remain competitive.
• 🤔 The term 'Lala' in the transcript refers to a businessman who prefers to deal in cash to avoid taxes, thereby generating black money.
• 📈 The competitive nature of the market can lead businesses to include GST in their prices, making it harder for them to pay the full amount of taxes owed.
• 🚫 Demonetization was an attempt by the government to curb black money by discontinuing high-value currency notes, forcing people to deposit their money in banks.
• 🔄 The introduction of GST aimed to bring more transparency and control over the unorganized sector, where a significant portion of black money transactions occur.
• 📊 Fake billing is a common illegal practice where invoices are issued without actual goods being exchanged, creating a paper trail for black money.
• 🌐 Hawala networks, operating internationally, facilitate the transfer and laundering of black money across borders, often evading taxes and regulations.
• 🏢 The government's efforts to track and control black money include monitoring large cash withdrawals and implementing policies to prevent tax evasion.
• 📚 The speaker emphasizes the importance of financial literacy, urging viewers to seek more knowledge on the subject and share the information to raise awareness.

Q & A

What is the basic definition of 'black money' as described in the script?

Black money refers to income on which no taxes have been paid, as opposed to 'white money' which is income that has been declared and taxed.

Why do some businesses choose to deal with black money?

Businesses may choose to deal with black money to avoid high tax rates, stay competitive in the market, and maximize their profits.

How does the script explain the difference between direct and indirect taxes?

Direct taxes are those like income tax that are paid directly to the government by individuals or businesses. Indirect taxes, such as GST, are collected by businesses from consumers and then paid to the government.

What is the term 'Lala' used in the script to signify?

In the script, 'Lala' is a colloquial term for a businessman who prefers to deal in cash to avoid paying taxes, thus generating black money.

What is the impact of black money on the government and the economy?

Black money deprives the government of tax revenue, which is essential for funding public services and infrastructure. It also undermines the economy by distorting market competition and promoting illegal activities.

How did the script describe the concept of 'fake billing'?

Fake billing is a fraudulent practice where invoices are issued for goods or services that were never actually provided or received, creating a false trail of transactions to hide the generation of black money.

What is the role of the 'Makeshifter' in the context of the script?

The 'Makeshifter' refers to individuals or businesses that find ways to adapt and continue their black money operations despite government policies and regulations aimed at curbing such activities.

What was the purpose of the demonetization policy mentioned in the script?

The demonetization policy was introduced to curb the circulation of black money by discontinuing high-value currency notes, forcing people to deposit their money into banks and thereby bring it under the purview of tax authorities.

How does the script illustrate the process of money laundering?

The script describes money laundering as a process where black money is sent abroad, often through illegal channels like hawala, and then rerouted back into the country in a way that appears legitimate, thus 'cleaning' the money of its illegal origins.

Outlines

00:00

💼 Understanding Black and White Money in Business

This paragraph introduces the concept of black money and contrasts it with white money in the context of business and taxation. Black money refers to income on which no taxes have been paid, whereas white money is income that has been declared and taxed. The speaker explains how businesses might hide income to avoid high tax rates, especially when earnings exceed certain thresholds, leading to tax evasion. The paragraph also touches on the importance of taxes for public services and infrastructure, and how tax evasion affects the government's ability to fund these services.

05:03

💡 The Genesis of Black Money and its Impact on the Economy

The second paragraph delves into the origins of black money, illustrating how cash transactions without receipts can lead to untaxed income and thus contribute to the black money economy. It discusses the negative consequences of this practice, including the loss of potential tax revenue that could be used for the country's development. The speaker also explains government initiatives like demonetization and the implementation of GST to combat black money, and introduces the term 'Makeshifter,' reflecting the Indian knack for finding loopholes in the system.

10:03

📊 The Complexities of Black Money through Fake Billing and GST Evasion

This paragraph explores the intricate mechanisms of black money generation, particularly focusing on fake billing and the misuse of the GST system. It describes how businesses might engage in fraudulent transactions, creating a paper trail of invoices without actual goods exchanged, to claim GST credits illegitimately. The speaker provides an example of a businessman, referred to as 'Lala Ji,' who avoids paying taxes by purchasing and selling goods through a complex web of fake bills, ultimately benefiting from the cash-based black money system.

15:09

🌐 The Global Network of Hawala and Money Laundering

The final paragraph discusses the international aspects of black money, specifically the use of hawala networks for money laundering. It explains how black money can be transferred overseas, often to tax havens, and then rerouted back to the original owner through a series of transactions, thus 'cleaning' the money of its illicit origins. The speaker highlights the difficulty in catching those involved in such schemes due to the small percentage of people who are actually apprehended, emphasizing the persistence of the black money cycle and its detrimental effects on the economy.

Keywords

💡Black Money

Black money refers to funds that are earned, but not declared for tax purposes, thus remaining 'invisible' to the government. In the video, it is explained as income on which no taxes have been paid, contrasting with 'white money' which is income that has been declared and taxed. The concept is central to the video's theme of discussing the mechanisms and implications of tax evasion in the business world.

💡White Money

White money is the opposite of black money, representing income that has been properly declared and on which taxes have been paid. In the script, it is used to illustrate the difference between legitimate, taxed income and unreported income that constitutes black money.

💡Tax Evasion

Tax evasion is the illegal act of not paying taxes on one's income. The video discusses how high tax rates and competitive market conditions can lead businesses to engage in tax evasion, thereby creating black money.

💡GST (Goods and Services Tax)

GST is a value-added tax levied on most goods and services sold for domestic consumption. The video explains how businesses might avoid paying GST by not issuing receipts for cash transactions, thereby contributing to the creation of black money.

💡Income Tax

Income tax is a tax imposed on individuals' or businesses' income by the government. The script discusses how the burden of high income tax rates can lead to tax evasion and the generation of black money.

💡Lala

In the context of the video, 'Lala' is a colloquial term used to describe a businessman who engages in tax evasion practices, such as accepting cash payments without issuing receipts to avoid tax liabilities.

💡Organized Sector

The organized sector refers to a part of the economy where business operations are formal, regulated, and typically involve the payment of taxes. The video contrasts this with the unorganized sector, where black money transactions are more common.

💡Unorganized Sector

The unorganized sector is characterized by informal business activities that often do not comply with government regulations, including tax laws. The script mentions that black money transactions are prevalent in this sector.

💡Demonetization

Demonetization refers to the process of stripping a currency unit of its status as legal tender. The video discusses the Indian government's decision to demonetize 500 and 1000 rupee notes as a measure to curb black money.

💡Hawala

Hawala is an informal value transfer system or method of transferring money without any physical exchange of cash. In the script, it is mentioned as a method used to launder black money by transferring it overseas and back into the country through complex networks.

💡Money Laundering

Money laundering is the process of making illegally-gained proceeds (black money) appear legal (white money). The video describes how money is cycled through various accounts and entities to disguise its illegal origin and reintroduce it into the legitimate economy.

Highlights

Black money is not actual black-colored currency but refers to income on which no taxes have been paid.

White money is income on which taxes have been duly paid to the government.

Government funding for public services like hospitals, schools, and infrastructure comes from taxes.

Businesses may evade taxes due to high tax rates and intense market competition.

Tax evasion often begins with underreporting income to avoid high tax liabilities.

The term 'Lala' is used to describe a businessman who prefers cash transactions to avoid taxes.

Cash transactions not reported to tax authorities can lead to the creation of black money.

Demonetization was a policy implemented to curb black money by discontinuing high-value currency notes.

GST (Goods and Services Tax) was introduced to streamline taxation and reduce black money.

Makeshift arrangements and fake billing are tactics used to evade GST and create black money.

Hawala transactions involve money transfers outside the formal banking system, facilitating black money circulation.

Money laundering is the process of reintroducing black money into the formal economy through legal channels.

The government's efforts to control black money include tracking large cash withdrawals and regulating loans.

The organized sector operates with white money, while the unorganized sector is more prone to black money transactions.

The impact of black money on the economy includes reduced government revenue and potential for corruption.

Financial literacy is essential for understanding the business world and the implications of black and white money.

The speaker emphasizes the importance of sharing knowledge about black money to increase awareness and combat its effects.

Transcripts

The Game of Black Money. When we talk about black money, have you ever seen a black note?

Have you seen black notes of any country, you have not seen them. Then what is this black money?

when I was young, I had heard the word, Black Money, Black Money, I didn't

even know what that meant. But when we are into the Business Field. Now I completely

understand what is this black money, how it works, and today you are going to get

information on this black money. It will open your mind to how the game of black money is

going on inside the business world. See what is black money and white money?

Black money simply means, I will make you understand in easy words. So you or even a 6-year-old

child will understand. Whatever we earn, we pay taxes on it, We show the government that

we have earned it, what we show or we pay tax, that is our white income, and what

we do not show means Income above which there is no tax paid, or

we have not given money or not shown, then it is our black money. So when we talk about

black money vs white money, then white money means on which tax has been paid and black

money means on which tax has not been paid. Then in such simple words, you have understood

that it is black money and it is white money. But now from where the problem starts, understand

this, To keep the government working, today the

government has hospitals, the government has schools, roads are being built,

highways are being built, the flyover is being built, Major projects of the government are

going on. Where does this money come from? This money comes to the government through

taxes, either direct tax or indirect tax. Direct tax means income tax and indirect tax

means, which is indirectly taken from you like service tax or GST, you pay goods and

service tax, there are many other taxes, then I have told you majorly income tax or we can

say direct tax or indirect tax. Now, which will be the black money, on which

these taxes are not given or on which direct taxes or indirect tax will not be given, then

why do businessmen hide their income? See, in today's date, businessmen say that they

are in trouble, why, think by yourself. Then you will understand the situation. That is

why people do this, any person is earning money, the businessman is earning money. If someone is

doing business inside a private limited company, then according to today, he has to pay 25%

tax, and if someone is doing business individually , then he has to give a tax of 30%, depending

on his income. I talk above 10 lakhs. Below that does not

matter because there is no question of black money . The game is all above it , so if someone

is above 10 lakhs earning , then he has to give 30%, and if he is earning more than it

he has to give cess, there is Education cess, there are many additional taxes, then

it increases more than 30%. Then he also has to pay GST. This means you see GST is

almost, if we take the average then it is also 5% and there is also 28%, then

18% is GST, then I give you an example, You will feel that GST is not being given by humans,

the customer pays GST. But in today's date, the market has become so competitive that even

GST has to be included. Now, what is the problem of businessmen, understand this. The businessman

says that earlier I used to work on a very small margin. Then I made some profit. On

that profit, if I pay income tax of 30%. He also takes 18% GST from the customer. The

the government says that charge from the customer and he charges from the customer. But when money

comes to him, Money comes into the account by charging the customer. The government demands,

then it hurts him to pay 18% tax Because it has come to him. So here he says that I have to pay

a tax of 48 percent. I have a lot of trouble, I cannot give it. When you talk to these businessmen

and tell them if the government charge tax 10 percent, then they say that we will do

all the income in white. We will give tax on all. When the government is taking so

much tax from us, we are unable to pay it. Tax evasion starts from here.

Now, what do I mean by Lala? Lala means you see the businessman.

Lala means in my typical language to give me. just bring it, take nothing, I will not

pay tax. Just give me. So Lala says that just keep giving me money, keep giving, keep giving

me. What does Lala Ji do? Lala Ji says that whatever you wish to take from my shop, I

have a shop. I have my showroom. Take as you wish, but I need money in cash. Now there

is nothing wrong with taking cash. As long as you are filing ITR to the Income Tax Department

and showing it to the Income Tax Department, how much cash do I have. He says that I will

not take it into account. If you put money in your account, I will have to charge Extra.

I will not take it into account. Account rates are different. You do not transfer. Give me

in the cash, because as soon as the money comes in the cash, if they will show to the

income tax department, how much cash they have, then there is no GST on it or not an

income tax on it, then all the money that has come in the cash, It becomes Black money

and this is the beginning of black money. I am going to show you a big game of Black

money that is a big game of Black money. Right now, I am telling you that whatever you are

buying from the shop, if you are paying in cash and they are not giving you the receipt.

If they are not giving you the receipts, then you will understand that it has gone Inside

the black money, it has gone in his pocket and the government will not have any benefit

from it. Neither GST has come on this nor there is income tax on it, so our country's

progress stops from here. But what should a businessman do? The businessman will say

that I will see the progress of the country later. First I will take care of my family.

money is not left with me, the market is very competitive, how will I save money, then what

is the game in the market is going on. that this game is going on for black money. Within

India, there are two types of sectors, one is an organized sector where the entire money

is in white and one in an unorganized sector where the whole game runs in black, then

we contribute to our economy 50-50. But, when the game is going on in black, then the government

cannot tolerate it and that is why the government brings policies that we can control black money.

just like demonetization happened. When you see that the government turned down

the Currency, that the notes of 500 and 1000 will be discontinued. When these 500 and 1000

notes were discontinued, Why did this happen? Because those who have the money will come

and deposit it in the bank. You must have seen that people burned notes,

Notes are lying on the road, Notes are flowing in water. whether you had heard or

not . All this has happened In our country, but the government still has money. This means

fake currencies were also printed in the market. Anyways, now it comes here that this demonetization

happened, and then the government brought GST, why? Because that is an unorganized sector.

If GST comes here, then GST will wrap everything, now the game starts from here because a word

is very famous inside India that is, Makeshifter. This word came inside the Oxford Dictionary,

then for Indians bring anything, this black money game does not seem to stop in India at the moment and it is increasing.

Now I will tell you what this black money game is. It did not stop even after bringing GST.

Now let me tell you why, Suppose there is a businessman, Lala Sahab runs ABC company,

He sells a product to the customer of rs 100 with 18% GST of rs 18,

He charged ₹ 118 from the customer, Now legally this ₹ 18 will be included in the

GST . The government will demand it, and deduct your profit from this 100 rs. I have told

you income minus expenses is equal to profit. And suppose if you saved ₹ 10 on this, then

you have to give income tax on it, then Suppose on ₹ 10 , he have to give income tax on

₹ 3, so ₹ 18 deducted in GST, ₹ 3 saved to him, the government is happy with it, but

people are not happy in it. People say that we don't want to give this. Lala says I do

not give tax. Then you will say that if they will not pay tax, they will take them

from home. They Should be lifted, but what happens now is that people have seen inside

GST. Now look at what the game of black money is going on, Nobody will tell you this. What

is this black money game going on? Understand this , because the game is going

on at a big level. The government says that if you have sold some goods, then its raw

material or you have Bought it from behind also, Suppose Lala Ji purchased raw material

from somewhere, now Let's assume that He had bought goods worth ₹ 100 and had given a

GST of ₹ 18 on it, so he had bought it for ₹ 118 and sold it for ₹ 118. Well, this

does not happen. Definitely, they will keep some margin, but I am giving the example.

Suppose he brought in some less and now it will be easy for calculating the example , then

if he brought the goods from somewhere, Lala Ji had given money to someone. Here money

was paid and the goods were sold, so here it is GST, it is already paid, then Lalaji

Legally can claim the credit of this GST. If he had to give ₹ 18 to the government.

If he had to give ₹ 18 here then what would he say, Lala Sahab that this already paid,

I will give you ₹ 0. Then suppose there was a ₹ 17 paid here and it is ₹ 18 then

take ₹ 1 from me. I gave a GST of ₹ 1. Now you will say what is wrong with this,

it is legal but now what is illegal? I will explain it to you. From here, what they have

purchased is not necessarily that they must have purchased goods, There is a concept in

the market which is fake billing, fake billing means that the goods have not arrived. Only

the bill has been cut. Now this company is giving a bill to Balaji, this company took

a bill from the B company, B had taken a bill from C company, C had taken a bill from

D company and D had taken bill from E company and E had taken a bill from F company, which

was a fake company. These are all mixed companies. Your entire system is running from here and

this fake company is registered in the name of a rickshaw puller. This fake company cuts

the bill of 10 thousand crores. Now it does not pay GST at all.

There is no GST paid here, no tax , no GST given.

Now the government says that they hold this company , they are not giving us GST. This

company has turnover and it is doing default. When you go here to catch them, they get

a rickshaw puller, he says, ``What is this GST? We do not know about GST . We do not

know if a company is running in our name, then it is caught from here a SCAM. That company

was going on in the name of rickshaw puller And there was a turnover of crores, they give

bills to each other , the government can track up to it , but if there are many parties come

between it, then whom will the government catch, when billing reach to Lala Ji, then

Lala Ji doesn't know anything. Lalaji will say that I don't know who this is. Lala Ji

had taken a genuine bill and the matter was over, I purchased raw material . That is over

now . You feel that it is over. This has started from here. Lalaji sold the goods for ₹ 118.

He gave ₹ 118 to the A company in the account, then this A company has to pay income tax

as well as GST and but you understand he gave ₹ 118 total. 100 plus 18 then he took credit

of 18 and deducted ₹ 100, it became income tax and GST of 0. So neither GST nor income

tax is to be paid. I am explaining to you the game of Black Money. Now it is given in

the account. Now, this Person transfers it further, and then that person transfers this

further when the money reaches here, he says that take cash from me. That is why the government

has started deducting TDS on the withdrawal of cash from accounts today date. If you withdraw

cash above one or two crores, then the government will keep an eye on you , that is why cash

is being withdrawn and if cash is coming out from here, then it reaches Lala Ji. After deducting

some commissions, Suppose ₹ 116 instead of ₹ 118 reaches Lala Ji, neither income

tax paid nor GST paid . Lala Ji is enjoying ₹ 116. And Lala Ji is spending all the money

in cash because he is taking bills from the account. The game is, that GST on Rs 10,000

crore has not come, that is Government's loss . You see that the government is alert.

But what happens now when we are talking about GST. There is theft of tax, there is income

tax evasion, where this money goes. Now Lala Ji has ₹ 116 in cash, but tomorrow he will

need it in his account. They would need money. There can be 116 crores instead of ₹ 116.

This money has come to them but this is needed in the account. If you have to buy some property

or buy a car tomorrow. On today's date, if you want to do anything in India, then you

should have white income, which should be in your account. Now there is one more thing

when you take a loan from someone, then when you take the loan, we call it the entry loan,

the entry of the loan is made. When there is a loan entry, then no tax on

the loan entry . You just have to show that I have got an investment from this company

or the loan has come and there will be no tax, then you can use this money in your business

and later you can repay it with or without interest. Well in good, it is legal.

Now what is illegal going on, people, Lala Ji do hawala of this ₹ 116. Now, this hawala

are agents , and they are in every country. Big people are running hawala networks just

like don't people like Daud Ibrahim, these people are controlling it. There are many

businessmen inside it. So what they do in hawala , they have to send this ₹ 116 Cr

to Dubai , Then it cannot transfer my account. They give it here. Now it is the hawala who

is sitting in Dubai. These two have settings. He says that money has come to me from a person

B in Dubai , here was person A and it was transferred from A to B in a small commission.

Money reached Dubai. Now there is no income tax in Dubai, so even if you put that money

inside an X company, there will be no tax. Suppose that company earned money , it sent

money to another company in Europe, and after that money rerouted in India. It does not

reach directly to Lala Ji, Suppose it reroutes from N company then It reaches to M and then

it goes to P. After that, this company again gives money to Lala Ji, now that 116 Crores

had gone from here, This roams again and came back to Lala Ji through money laundering. Now,

for People who get caught in this money laundering, the government takes out as much as they have

earned. But see what happens, how many people are trapped in this out of 100, they are 2-3

, and other 97 are saved in this. And the circle of black money going on, money does not reach the government and it keeps ongoing.

Now, what is this? If I keep explaining this to you, it will probably be the evening today

because I Understand the Business Field Very Well , see why I am explaining this to you,

because few people are paying attention to your financial knowledge. Nothing will happen

with mere motivation. You need to understand the real business, how it works and for that

I Want you to be that at least you are so literate that you can understand financial

things. And therefore I am teaching you on these topics , so if you want me to continue

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I will see you in the next video till that time you go self-made.