Agriculture income is a popular way to convert black money (undeclared or unaccounted money) into white money (legally declared money). Here’s how the process often works:
1. Declaration of Agricultural Income
- Exemption: In India, agricultural income is exempt from income tax under Section 10(1) of the Income Tax Act, 1961.
- Fake Income: Individuals with black money may show inflated or fake agricultural income to justify the possession of large sums of money.
2. Purchasing Agricultural Land
- Investment in Land: Black money is often used to purchase agricultural land. The purchase is usually made at a lower reported value, with the excess amount paid in cash.
- Income Generation: The land is then used to generate “agricultural income,” which is declared as tax-free income.
3. Income Declaration
- Fake Bills and Receipts: To justify the agricultural income, fake bills and receipts are created for the sale of crops, livestock, etc.
- Bank Deposits: The declared agricultural income is deposited in banks, making it appear as legitimate white money.
4. Passing Off Income
- Loans and Gifts: The white money can then be passed off as loans or gifts to other individuals, further distancing it from its black money origins.
- Investments: The converted white money is then invested in other avenues like real estate, stocks, or business ventures.
5. Legal Loopholes
- Lack of Scrutiny: Agricultural income is often less scrutinized by tax authorities, making it easier to use for money laundering.
- Regional Practices: In many rural areas, cash transactions are common, making it easier to hide the true origin of the money.
This method exploits the tax exemptions available for agricultural income, making it a preferred choice for those looking to convert black money into white money. However, it’s illegal and unethical, and strict penalties can be imposed if caught by authorities.
