r2i forum

ksundaram;10553As far as you are concerned it is White. The seller may treat it as Black for his purpose. You are on the right side of the law but he is not. It is highly desirable to avoid such transactions, of course, as you agree. It is very frustationg - isn't it? Do we blame the system or what?

MadMax;16006Converting white to black. Just withdraw cash from your account , use it to make a payment without any receipt and it becomes black for the person who takes it.

But, how to convert black to white? My question from another thread...If I sell my property for 60 lacs...20 lacs white and 40 lacs black. What to do with the 40 lacs black money?

All this black payment in RE...eg. 40 lacs....is it made in cash? That would be a lot of currency! If that is the case then how do you handle the cash? Can u go deposit in the bank? Or do you have to hide it under you mattress forever?[/quote]

I see you have added the question "But, how to convert black to white?" to this post.

There is no legal way to do that other than money laundering which would involve paying taxes to the govt. in order to convert the black to white. It goes w/o saying that converting the black to white does not absolve one of the illegal activity originally involved in! People can only try to conceal the black money (BM) and the transaction which made it possible, they cannot make it disappear though.

IMO, there are two broad categories of people who end up w/ BM at some point of time or another -

a) First - A person who earns black money regularly by involving in bribe taking, or extortion/embezzlement and/or pilfering.

IMO, only such people w/ BM worth crores plan laundering operations. They don't mind paying taxes to the govt. because it never was their money to begin with?

I'm guessing that such people usually have a business as a front, show income, pay taxes and convert the BM to white.

They are also big spenders - weddings, foreign jaunts etc. - any opportunity to spend/pay in cash!

The more god fearing variety will spend on god-men, gods and dump quiet a bit in the hundies!

b) Second - A TDS category person, coming in to possession of unaccounted money in a rare one-of transaction - usually selling RE

40 lacs is not a lot of money in India, if one wants to hide it in a non-depreciating asset, especially so for an NRI.

One can:

1) Reinvest in RE plots.

2) Construct a home and disperse all/most of the BM by cash and undervalue the bldg

3) Buy gold and diamond. This can be accounted for as inheritance or shown as wealth accrued over a period of time.

Issues/caveats- Apparently one is supposed to declare all personal wealth including jewelry to the IT dept.

I wonder if Mr, X could declare more jewelry holdings than he presently owns fully aware that he is going to be in receipt of BM in the near future and actually make that purchases as and when he gets that BM? Sort of a hedge declaration?

Can he also declare more "inherited" jewelry than he actually inherited, only to be made good at some point of time w/ actual jewelry? Does it make sense to have parents redraw their wills and bequeath jewelry that they don't even have?

Mr. X can sell the jewelry later on and transfer the asset in to some other type of holding?

Disclaimer - I'm only trying to find out how people in India handle BM. Indian black economy is very big and cash transactions big and small, take place every day. I do not approve of or encourage such activities.

In my books anyone who has bribed someone, paid extortion money to the police or a govt. official, purchased a movie ticket from a scalper has actually become a party in BM transaction, notwithstanding the size of amt. involved.

MadMax;16199
That is a lot of paper. So, where do u put it before you disperse it? In your house? Isn't that too risky?[/quote]

Look for others (with all white income) who are looking to buy properties. They would need black too. Take the check from them and give them the cash.