How to Convert Black Money to White in Urdu, Hindi & English

Posted on Nov 12 2016 - 12:58am
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How to Convert Black Money to White in Urdu, Hindi & English

What is Black Money – Black money is tax evaded income. It can be earned through both legal and illegal means. The majority of the black money is the income received in cash not accounted in books and not revealed to the government for tax purposes.

How does the black money get generated?



Corruption– Mr. Blackappa, an officer in government service, demands Rs.1 lakh from Mr.Shortcut for doing a favour (say to approve the building sanction plan). Mr. Shortcut hands over Rs.1 Lakh to the officer in cash (no one takes a bribe in cheque/demand draft!). This money will not be accounted in the books of Blackappa and he won’t pay any taxes on it (it may be good to legalize bribe and collect taxes on it) Count # 1 – Rs.1,00,000 black money is generated.

Sale of property – Mr. Greedy buys a property from Mr. Cheat for a total sale value of Rs.50 Lakhs. He takes Rs.35 Lakhs in cheque/DD and the balance in cash. He pays stamp duty on Rs.35 Lakhs, and the seller pays capital gain tax considering the value as Rs.35 Lakhs. Count # 2 – Rs.15,00,000 black money is generated.

Sale of goods/services without invoice – You buy a sofa set from a furniture dealer. What is the price? The shopkeeper will tell “the price is Rs.60000 plus taxes at 14.5%”. Any discount? The answer from him will be “Yes madam, I can offer it at Rs.58,000 without the bill. If you want, I can write on a piece of paper or on a quotation” Count # 3 – Rs.58,000 black money is generated.

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Accounting for fictitious expenses –  A businessman tells his accountant “I can’t pay so much tax. Do something, reduce the taxes” The accountant accommodates by booking fictitious expenses. If the businessman declares a profit of Rs.15 Lakhs against the actual profit of Rs.25 Lakhs, black money of Rs.10 lakhs is created. Count # 4 – Rs.10 Lakhs black money is generated.

How is it converted?

The difficult part is converting the black money into white money without any taxes. In all the above examples, the people who have earned money in cash (black money) can’t deposit it in the bank. Right? So, they have to hoard the cash somewhere, say in a bank locker, suitcase, etc. Or they can also spend this amount in cash towards the purchase of property, white goods, etc. Let’s understand the ways of converting black money.



Showing fictitious sales – There was a movie casted by the son of a powerful politician. This movie was an utter flop. But, it ran ‘houseful’ (fictitious) in Kalpana Theatre of K G Road for a year! During those days, people were talking that the black money earned by the father is converted into white by showing the income from the movie!

The money earned through illicit means or corruption is converted with the help of businessmen by booking fictitious sales in the books of the company.

Increase the sale price of an asset – One of my clients decided to buy a property from a senior government officer for a price of Rs.42 Lakhs. But the Officer wanted him to pay Rs.60 lakhs in cheque! In turn, he wanted to return the difference amount of Rs.18 Lakhs and additional stamp duty/registration charges in cash to the buyer. Thereby the Officer converted Rs.18 Lakhs of black money to white without paying any taxes. (He reinvested the sale proceeds in another property and got the long term tax exemption!)

Hawala Route – Have you heard about hawala transactions? If not, I will tell you in simple words. Assume Mr.ABC, a politician or government officer in Bangalore has Rs.25 Lakhs in cash. Since it is black money, he can’t deposit the same in the bank. So, he identifies a hawala agent (don’t search in google, you won’t get one!). The Hawala operator takes the cash in Bangalore and through his counterpart, hands over Rs.25 Lakhs worth in dollars/pounds/dirhams in a foreign country to his/to his representative. Mr.ABC gets this money back to India as Foreign Direct Investment (FDI) or seed fund in a private company, etc. Or he may choose to invest abroad in properties / shares. Thus, he converts black money to white without paying any taxes.

Depositing in banks less than Rs.50000 – This route is taken by small time operators. They open multiple bank accounts and deposit cash upto Rs.50000 at a time. Remember, if you have to deposit over Rs.50000, you have to give PAN details to the banker. Mostly, these kind of petty transactions goes unnoticed by the income tax department and thus, black money is converted to white without paying any taxes.

Agricultural Income – Agricultural Income is exempt from Income Tax. This means the money earned from the sale of paddy, pepper or wheat is exempt from tax. So, the people who earn black money will obtain a fictitious receipt from traders in agricultural commodities as if they have sold the products. For the sake of records, these people will acquire or show the proof of ancestral property in villages!

Gifts from relatives and friends on occasions – Any amount of money received from relatives (gift) is exempt from Income Tax. Is it not an easy way to convert black money to white? Simple, show the cash received in your son’s or daughter’s birthday as gifts from relatives!

Gifts from non-relatives and friends attract income tax. But those who have huge black money can show gift and pay taxes. Still the money earned through corrupt practices can be converted into white (after paying taxes). One of the classic examples is the amount of gift declared by a former Chief Minister who paid huge taxes during that year. She declared around Rs.200 Crores as gift received from her well-wishers and paid taxes on it!

Sale of Gold and Diamonds – Well-known professionals suggest this route. Suppose, Mr.XYZ has Rs.25 Lakhs cash and gives this amount to a Jewellery shop (not all shops will do this kind of dirty job). The Jewellery shop will issue a receipt for having bought Gold/Diamond worth Rs.25 Lakhs and make payment in a cheque to Mr.XYZ. For facilitating this transaction, he will charge a fee. Thus Mr.XYZ converts his black money into white, without paying any income tax.

Avenues for spending black money in black

Investing in property – The middle-class black money earners spend/invest them in black. For example, Mr.GHK sells a house for Rs.90 Lakhs (of which, he takes Rs.30 Lakhs in Cash – black) and reinvests/buys another flat/plot by giving Rs.30 lakhs apart from white money. So, the rule is Black for Black and white for white

Spend on weddings and functions – I needn’t explain it. If you attend the weddings at Palace Grounds in Bangalore and hi-fi wedding halls, you will get to see the ‘real color’ of black money. As I understand there are people who spend 2-5 Crores for a wedding! A large sum of corrupt money is spent on social events and functions.

Buying goods/services where the identification is not mandatory – For example, white goods, building houses and its interiors, etc., are done using black money earned in cash.

School Fee and donations – You may be aware of donations! For the medical seat, over a crore of rupees to be paid as a donation in cash!

Buying gold / precious metals – Instead of accumulating cash, people will buy gold, diamond and other precious metals. People buy gold in small quantities, from different shops, in the name of all members of the family.

Now the big question – Is this not known to the Government? What actions have they taken to curb the black money? Honestly, so far, nothing much is done, except ‘lip service’ by a few politicians and a few ‘cosmetic’ changes in the law.

10 Method to Convert Black Money to White

Bogus Loan Entry

Popular method people use to convert black money to white is by showing bogus loan entry. Modus operandi under this case will be people give black money to friend or relative and take a cheque from them. This is kind of bogus loan entry to convert black money to white.

In some cases people give repayment of this loan by giving back cheque. People doing this must understand that Income tax department is watching every transaction and tax payer have to prove genuineness of every transaction.

Formulation of Trust & doing Charity

Another popular way used by people to convert black money to white is by formulating trust for social cause. They make executive bodies of own people in trust sometimes illiterate people like driver cook etc. They donate black money to this trust as charity to convert black money.

On paper it is charity but off the shelf it is conversion of black money to white.

Showing Income as Agriculture Income

Another popular way of converting black money in to white is by showing income as agriculture income. In order to show income as agriculture income you must possess land and it must be used for agriculture purpose like plantation, garden nursery etc.

However there are various conditions you need to satisfy in order to claim agriculture income.

Showing Cash Income from Profession

Another popular way to convert black money to white is by showing income in cash. Income from tuition, professional fees or commission is shown as cash by many tax payers it is nothing but converting black money in white. 

Sale of personal belonging like Jewelry

Go to known jeweler and give him all black money you want to convert. He will give you cheque for the same amount. He will also give you purchase bill showing you sold your personal Jewelry to him. By this way your Black money is converted to white and you need not to pay capital gain tax even.

Converting Black money by Investment

Another method people use to convert black money to white is by making investment in cash.

People purchase insurance policy and pay premium in cash. For example if insurance premium is 50000 Rs/- payable quarterly, than people pay first premium via cheque and rest all premium in cash. This is most simple and popular way to convert black money in white.

Getting Black money as gift

Another popular way to convert black money to white is by getting gift from relative. Modus operandi is simple you have black money and your relative has the same amount of white money. Your relative issues cheque to you as gift and you will give your black money to him/her.

Depositing Black Money on name of Family members

Another popular method for converting black money to white is to open bank account on each and every individual family member. Deposit black money on the name of every family member to convert it in white.

By Real Estate

Real estate is sector where majority of black money is parked. People use real estate deals to convert black money to white. It is observed that people do fake real estate deal exchange money and cancel these deals due to non-payment of money.

By Declaring Black Money

Best method for converting black money to white as per me is by declaring this money to IT authorities and paying tax on this money to convert it in white.


Disclaimer –

I don’t recommend readers to follow any of these illegal methods for black money conversion. This article is just for exposing loop holes of our system. So that the government and RBI can take strict steps to eliminate these ways so that country will be free from black money. I am against black money and black money generation ideas.

If I have missed any other methods which people use to convert their black money into white money I request you to share it in comment section.

What Is Black Money – Black money Is Tax Evaded Money. It Can Be Earned Through Both Legal And Illegal Purpose. The Major Of Black Money Is The Income Received In Cash Not Accounted In Books And Not Revealed To Government.

How is it converted?

  • Increase The Sale Price Of An Asset
  • Showing fictitious sales
  • Hawala Route
  • Depositing in banks less than Rs.50000
  • Sale of Gold and Diamonds
  • Agricultural Income
  • Gifts from relatives and friends on occasions

Avenues For Spending Black Money

  • Investing In Property
  • Buying Goods And Services
  • Spend On Weddings And Functions
  • School Fee And Donations
  • Buying Gold Or Precious Metals

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How to Convert Black Money to White in Urdu, Hindi & English was last modified: November 12th, 2016 by disneyjunior