10 mindblowing 'Jugaads' only Indians can do to get rid of their black money

With the overnight demonetisation of high currency notes, Indians are now finding newer ways to settle large amounts of cash in their possession before all they have turns into merely a piece of paper.

It’s almost an amusing irony that in this fight against corruption, now even non-corrupts are finding ways to earn some extra bucks by helping people with unaccounted and black money in converting their old notes into new.

You would be amazed to know the tricks people are using to get rid of their black money:

1. Depositing money in the bank accounts of people with no or negligible income:

As declared by PM Modi where deposits exceed Rs 2,50,000, an inquiry will be made by the Income Tax Department regarding the source of such income and it will be matched by the Income Tax Returns filed by you. So, to leverage this, people are looking for bank accounts where they can park their unaccounted cash by paying them some commission ranging between 10% to 25%.

The most-in-demand are salaried class employees and people from rural areas, as they generally have a good or no track record with the Income Tax Department.

2. Hiring people to stand in queues for exchanging their old notes:

People are standing in queues for well-off people against 300-500 bucks for exchanging their old notes, but this business is likely to stop from now on thanks to the government’s decision of marking fingers with ink of those exchanging notes.

3. Exchanging old notes by visiting multiple branches of multiple banks on same day:

To stop this, now even the government has taken the decision of using indelible ink to mark fingers of those who have exchanged old notes so that there is a reduction in the crowd at the banks.

4. Purchasing Gold, Properties and Electronics in black by paying extra premium:

Gold is selling at more than 60,000 per 10 gm, twice its actual value and properties are being sold by the builders and contractors at more than their fair value against old currency notes. Same with electronic items like mobile phones, laptops where sellers are accepting old notes at a premium and showing sales in backdated invoices.

5. Arranging IDs of friends, relatives and closed ones and entering into arrangements with Bank officials:

Some people are taking an extra mile by arranging numerous IDs and then getting in arrangements with bank officials. Then they are exchanging their old notes with new notes against all the IDs at once. So, that way they are exchanging up to 4,00,000-5,00,000 worth of their old notes in one single day.

6. Paying Advance Salaries to the trusted employees:

It’s a very simple way of converting old currency into new currency for the businessmen as they’re paying their old and trusted staff advance salary in old notes which the staff is depositing in their account, interest on it being their extra income.

7. Offering Interest-Free Loans to relatives and friends:

In a bid to park enormous cash funds, people are approaching their relatives, friends and other known persons if they want some extra interest free funds which they can repay later after the air of demonetization and Income Tax inquiry settles down. It’s a win-win situation for both the parties.

8. Donations at Religious Trusts:

People are giving a donation with their old notes at temples, mosques, church and other religious places. After donating, they get into tie-ups with the accounts officials of that place and in exchange for 20%-30% commission, get new currency or Rs 100 notes.

9. Trying to keep the High balance of cash in hand in the Books:

This is one other trick used by the businessmen where they’re inflating their back dated sales and booking them as cash sales so that they can show handsome cash balance in white. Then they’re depositing this cash balance in their current accounts as proceed from sales.

10. Alliance with Political Parties

Do you know that political parties enjoy an interesting exemption - They are not required to furnish the source for donations received for Rs 20,000 and less? So, anyone having an alliance with a political party can very conveniently exchange/donate black money or unaccounted money against some commission without any risk to both the parties.

With government’s strict stance on this matter and the newly amended Benami Act (which prohibits transactions which are done in other’s name through illegal means like buying property in your servant's name etc.), and the upcoming amendments in Budget-2017, it will be wise to take any action only after considering all consequences and penalties that may arise in future. We strongly recommend that you should not get into such things as you never know when you can be penalised for it.

(The article has been originally authored by Vertika Kedia, co-founder of a taxation startup Tax2win.com. Tax2win is an online fintech startup which offers one-stop-shop for anything and everything related to taxation which includes Income Tax Return filing, Income Tax Planning and much more.)