How is the black money created?
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Explanation:
STEP 1: Illegal money is mixed with actual sales, by depositing in the company's bank account. The cash deposit will be justified as legitimate business income, say, cash receipts in restaurant. STEP 2: The company projects the fabricated sales as total income and files an income-tax return.
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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. ... Black money causes financial leakage, as unreported income that is not taxed causes the government to lose revenue.
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