Various attempts have been made to stop tax evasion but results have been futile in a large number of cases. Tax administration was inefficient and weak.
Government also demonetize in many cases such as in 1946, 1978 (here high denominations notes of Rs. 1000, Rs. 5000, Rs. 10000 were demonetized). But in these occasions a few amount was tendered to R.B.I. Thus demonetisation was not an effective tool of controlling black income.
Voluntary Disclosure Scheme was attempted at various times such as in 1951, 1976, and 1997. The Direct Taxes Enquiry committee mentioned rightly “They were more or less schemes of converting black money into white on payment of what turned out to be, in most cases, a small amount of conscience money.”
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The special Bearer Bond scheme 1981 also failed to analyse the black money to a large extent. A total amount of Rs. 964 crores was subscribed to the Special Bearer Bond.
The tax Rationalisation measure such as reduction of Direct tax rates, giving more allowance on depreciation on capital assets inelasticity of taxation, reduction of marginal rates for Direct and Corporation Tax have not yielded an adequate results so far.
We need to adopt a more rational approach in controlling black money by taking measures, reducing complexities in our tax laws and bringing more flexibility in the control system. Otherwise the menace of Black Money will remain in our system.
The taxation scheme should be made easier. More and more unaccounted money should be brought back into the economy, which may form a part of national income. Among the some critical suggestions to control the black money it is mentioned that bank credits should be given without much hesitation for the productive activities, this will create a favourable impact in reducing black money.
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Film industries for example demanding industry status to enjoy bank finance, which will reduce the use of underworld money. Offenders of taxes should be given strong punishment. Officials doing noble job in Income Tax Department should be given more incentives. Honest tax payer should be given reward which will be exemplary for other people also.
Basically it is the people’s conscience that reduces the menace of black economy. But the major responsibility lies with the socio-political leadership who will arouse this conscience in the minds of the people. Government should also be committed to ensure a corruption free administration where people’s desires will be reflected in the policy implementation.