HOW SHELL CORPORATIONS TURN BLACK MONEY TO WHITE AND VICE-VERSA?

There is an abundance of the procedures of changing the legally earnt money to black and vice-versa. Out of the many procedures one is listed below in brief for basic knowledge:

• There is a Company X, who is in a requirement of cash for several dealings, transcribes a cheque to a shell corporation Y and financially records for the same as payment of a commission. 
• Further, the Company Y returns the money as cash after charging a minor cut. Therefore, the Firm X as mentioned above has attained money for several illegal payments, but has manged to account the same in its books thereby subjecting it to deduction as to tax. In this procedure, the white money is transformed into black money. 
• The Company Y presents the money received from the firm X as prescribed income as an alternative of commission to evade taxation laws such as GST.
• Also, to evade revenue tax on the income earned, company Y displays that the expenditures are further made to different shell corporations towards execution of contracts.
• The income received is directed to different type of corporations – S, T. U, who interpret the same as the share capital. The money sharing procedure explained above is theoretical i.e. there is no real income flowing between the firms.
• The three corporations mentioned above can be ‘sold’ off to individuals/ corporations who wish to transform their illegal money to white. An individual interested in the same can purchase the shares of the corporation at a massive reduction to the book value (i.e. by giving only ?1 for a share worth 50 rupees). Therefore, it is mainly dependent on the necessities of the purchaser as to how much they wish to launder, as there are many shell corporations of diverse sizes.
• In this procedure the purchaser has attained the control of a firm, whose assets are clear by only having a portion of the price in white. The process is comparable to purchasing land by paying some portion in black and the rest in white.
• The purchaser can also carry forward the black money into the corporation and change it into legally earned money by arranging minor cash expenses through several banks, and depositing the same into the bank account of the firm.
• Thus, a shell firm operates as a middleman among two parties i.e. a party who wishes to change their white money to black and the vice versa.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.