Black Money is a term used to describe all funds earned through illegal activity and, otherwise legal income that is not recorded for tax purposes. The proceeds of black money are usually received in cash from the underground economy and, as such, are not taxed. This provides an incentive for people to engage in criminal activities and to avoid paying taxes on their income. Recipients of black money must hide it, spend it only in the underground economy, or attempt to give it the appearance of legitimacy through money laundering.The existence of black money has serious consequences for economies around the world. It allows criminals and tax cheats to prosper at the expense of law-abiding citizens. It also creates an unfair playing field for businesses that operate within the legitimate economy. Black money undermines trust in governments and financial institutions, which can have negative economic consequences. Finally, because much black money is laundered into legitimate investments, it can be difficult to track and combat its effects.
