how does the black money enter the legal economy here?
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Black money includes all funds earned through illegal activity and otherwise legal income that is not recorded for tax purposes. Higher amounts of black money in the economy often lead to increased corruption. ... Black money can be illegally disguised as legitimate money through money laundering.
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In its simplest form, black money is money on which tax is not paid to the government. Suppose a store accepts cash for its merchandise and does not issue receipts to its customers. That store is transacting in black money, as it would not pay tax on the unrecorded sales. As another example, consider a property buyer who purchases land valued at $200,000. If the buyer only reports $50,000 on the books and pays $150,000 under the table, then there is a black money transaction worth $150,000. The sellers in both examples have earned money from legal sources but evaded taxes.
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