How to Convert Your Black Money to White


With this sudden change in the economy as well as this drastic change in our currency system, our Hon’ble Prime Minister Narendra Modi has made a powerful move to reduce the levels of black money present in and across Indian governance system. While major investment advisors appreciated this move and are agreeing to the fact that this would lead to elimination of black money, most of the people agree that the rich bureaucrats, as well as people with tons of undeclared money, would find the loopholes in the system to launder their money in the 50 day window provided by the government.

On our quest to reveal how successful is this campaign, we present to you ten loopholes through which people can try and bring their black money back into the system.


1. Investing in Real Estate

This is by far one of the most common ways of converting your black money to white. People can invest largely in numerous real estate projects and can buy properties which would later generate revenue for them. One can easily pay the dealer or a broker through tax evaded cash and later on can pay the required stamp duty on that amount and thus would have all his black money easily converted into white. This method is simple as well as very effective in helping you convert your money. Also, the value of your property sooner or later would rise, and therefore you would get a better return on the investment you made.

2. Investing Your Money In Agriculture

Agricultural products are free from any tax payment and are again one of the most unnoticed ways to convert your black money to white. Suppose you have Rs. 30 Lakhs in cash which is unaccounted, you can simply go to some trader who deals in agricultural commodities and can obtain a receipt of selling any fictional agricultural produce such as rice, wheat, etc. Once you obtain this receipt, you can simply declare that black money to be obtained from selling your produce. For security as well as verification purposes one can always have documents of ancestral land being present in the village.

3. Depositing Them In Your Bank


This part is a bit tricky one and requires more work than previous ones. However, if you have the courage to accumulate all that black money then why hesitate in going an extra mile. You can have all your black money deposited in the banks through various accounts; however, you need to ensure that you do not deposit more than 50,000 in a single account. An amount less than 50,000 doesn’t require a PAN card to be provided while depositing and also doesn’t draw the attention of bank or Income Tax Officers.

4. Jan Dhan Account To Your Rescue

This method is usually successful for people with small amounts of undeclared worth. People can get farmers or cheap labourers to deposit amounts ranging from 2000-5000 in their Jan Dhan accounts. As soon as this strictness on money change dies down, they can get their money back after giving these farmers a cut for their services. This way the money is easily converted and would be back in the system.

5. Gifts From Relatives

This method of evading tax is also prominent in most households across India. One can pay their relatives the amounts in cash and can instead receive a cheque for the same amount as a gift from them. This would not only be free from any tax but would also convert the black money easily into white.

6. Exchanging Your Existing Notes To New Ones

This system of note conversion is one of the major factors which could lead to the same situation of black money stored in and across India. People can easily get their money exchanged at bank counters by asking poor people such as beggars and labourers to stand in line instead of them.  For example, you ask a beggar to exchange Rs. 2000 for you at a bank counter. For each exchange, you pay him Rs. 200. For example, if you hire 10 or 20 such people to do this job for you in a day, you can easily have Rs. 36000 per day converted to new currency. Next day the same set of people can be sent to different banks and hence this flow of black money continues.

7. Sale of Jewellery

This again has proven to be one of the very much effective methods of converting your black money to white. You go to a jeweller with all your black money and ask him to convert the same to white. The jeweller would issue you a receipt of sale which would say that you have sold your silver utensils to him. After that, he will issue you a cheque of an amount obtained by deducting his share from the same (which usually is 4 or 5 percent). Now this receipt which you get for selling your silver utensils will help you avoid any tax as any silver utilised for personal use is not accounted as a capital gain.

8. Hawala Route

This is the method of black to white money conversion practised by people who have huge amounts of unaccounted income residing within their house. For this process, you require hiring a ‘hawala’ agent, one who would convert your money to a foreign currency and send the same to his representative abroad. Once done then the representative sitting abroad would invest the same amount in your country over a real estate using Foreign Direct Investment (FDI), or you can show the same as a seed fund in any private company, and hence all your black money is converted to white and is injected back into the system.

9. Get Your Relatives To Help

Suppose you have five members of your family who do not work at an office and are self-employed. Setup their bank accounts and pay them the salary of 30 k per month in their accounts. Now as they are self-employed, they pay a very little tax of around 8-10k per person. You get all the access to their accounts and the rest of the money which in this case is 18L is all taken care off.

10. Making Charitable Donations and spending the amounts on functions and marriages

Numerous fake charitable institutions have been started up which tend to act as a cover for black money holders. These people show huge sums of money being gifted to charitable organisations for the sake of evading the same amount from any tax. You could also keep all your white money safe and spend all your black money on numerous social events as well as parties.

So, here we see that there are numerous methods that a black money holder can adopt to save his money as well as to inject the same black money back into the system. Although this initiative by our Prime Minister is praiseworthy, however, the 50 days window might prove to be a reason for this campaign to fail.

Disclaimer: No method described here is intended to be used, and is purely for letting the government know the loopholes within its campaign. It is our duty to pay tax as well as to help our nation progress.

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