Drishtikone
The black economy is bigger or equal to the “main” economy in India!! If only the Government could make a dent on this economy… things could become better. But then the bribing and corruption leads to the black economy also.. where do you think the business man pays the bribes from? BLACK MONEY! So they both go hand in hand!!
Revenue department officials over the past few weeks have been impounding luxury vehicles brought into the country without paying the requisite duties.
The government has taken more than 50 such vehicles, including top-end Toyota Prados, Landcruisers, BMWs, Jaguars and even a Porshe. Some of these cars cost more than US$300,000, given that the tax on such imported cars can be more than 100%.
Importers of these cars have been using loopholes in existing laws to sell them to rich customers. Recently, officials seized a Hummer allegedly belonging to film star Sunil Shetty.
It is not known whether the buyers of these cars knowingly evade the taxes, but the entire episode has highlighted another aspect of the way business/trade happens in India – the slew of controls, norms and prohibitive duties that has engendered the growth of the black economy. Black money has long been a subject of debate in India. The purchase of luxury cars is just the tip of the iceberg. It is estimated the government loses some $50 billion annually due to tax evasion.
Huge cash flows estimated at more than $100 billion form the basis of financing property purchases, money laundering, funding of political parties, corruption, opening foreign accounts and even drug and arms deals. There is a flourishing illegal economy in India that remains out of the tax dragnet with only 20 million out of a population of more than a billion paying taxes. Other estimates put the level of economic activity determined by black money to the tune of 30-50%.
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