Role of Black Money in Degrading a Nation’s Economy –Challenges and Remedies

Black Money is the untaxed money on which the defaulters wilfully don’t pay tax and try to hide it from the government or the Income Tax authorities. It is mainly done through evading taxes. Tax Evasion and Avoidance have been one of the hot topics of taxation law as they play an important role in the generation of black money in any nation. Tax Evasion is illegal and mainly consists of deliberate failure on part of an individual to pay the taxes. This not only deprives the government of the money that it should have received in form of a tax but also proves to be a blockade to the development of the country. The money that is not given to the tax officials may be used for illegal activities that are problematic for society and the nation at large. Tax Avoidance, on the other hand, refers to taking advantage of the existing loopholes in the taxing system and is not completely illegal. It doesn’t have the same repercussions that tax evasion has. The author has tried to figure out the reasons of generation of black money in an economy like India and proposed remedies or solutions for stopping it from going out of the country. The literature review is a perusal of write-ups of authors who have expressed their views profoundly and the research methodology is doctrinal in nature including the principles of applied research.