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Guilherme Mazui

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What is the Difference Between Black Money and White Money?

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The main difference between black money and white money lies in their origin, declaration, and taxation. Here are the key differences:

  • Black Money: This refers to money earned illegally or legally but not declared for tax purposes. It is unrecorded, unaccounted for, and not reported to the government for taxation. Black money can lead to increased corruption and adversely affect planning and policymaking. Most black money holders attempt to convert the money into legal money, also known as white money.
  • White Money: This refers to income that is legally earned and reported to the government for taxation. White money is generated after paying taxes as per the provisions and can be kept openly in a bank account or spent without any restrictions.

Some methods to convert black money into white money include:

  1. claiming agriculture income, which is tax-exempted.
  2. using black money to purchase real estate, gold, and other precious metals.
  3. giving employees advance salary of few months and depositing it in a bank account.
  4. using black money for daily expenses, such as purchasing groceries, petrol, etc., without withdrawing money from a bank.

It is essential to understand that converting black money into white money through legitimate means can help the economy and reduce corruption. However, using black money for illicit activities can have detrimental effects on the country's financial health and growth.

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  • What is the Difference Between Black Money and White Money?
  • Comparative Table: Black Money vs White Money

    • Comparative Table: Black Money vs White Money

    Here is a table highlighting the differences between black money and white money:

    Feature Black Money White Money
    Definition Black money refers to income that is not disclosed to the government for tax purposes or is obtained through illegal means. White money is the income that one generates after paying taxes as per the provisions and can be kept openly in a bank account and spent legally.
    Taxation Unrecorded and untaxed. Recorded and taxed as per the provisions.
    Source Black money often originates from the black market or underground economy, which may involve activities like drug trafficking, gunrunning, terrorism, and human trafficking. White money comes from legal sources and is generated through taxable income.
    Circulation Black money does not get circulated and remains in the possession of those involved in its generation. White money is circulated and used for lawful transactions.
    Impact on Economy Higher amounts of black money in the economy often lead to increased corruption and may have a negative impact on the economy. White money contributes positively to the economy through legal transactions and tax revenue.

    Black money is essentially unrecorded and untaxed income, often obtained through illicit means, while white money is recorded and taxed income generated from legal sources.

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    Guilherme Mazui

    Guilherme Mazui is graduated in journalism from the Federal University of Minas Gerais (UFMG) and a master's degree in Communication from the University of São Paulo (USP). In addition, he has experience in advertising writing and has worked as a content editor in several companies.