Black Money refers to funds that are earned through illegal means and are not reported to tax authorities. This money is often accumulated without adhering to legal frameworks and can evade taxation.

Sources:

1. Tax Evasion: Individuals and businesses may underreport income or misrepresent financial information to avoid paying taxes.
2. Corruption: Government officials may receive bribes or engage in corrupt practices to accumulate unaccounted wealth.
3. Money Laundering: Illegal funds are processed through various channels to appear legitimate, obscuring their true origin.
4. Smuggling: Involves the illegal trade of goods, such as drugs or contraband, generating significant unreported income.

Effects:

1. Economic Inequality: Black money exacerbates wealth disparities, leading to social unrest and instability.
2. Undermining Development: It hampers effective implementation of government schemes, diverting funds from public welfare.
3. Corruption: Black money fuels corruption within governmental and corporate sectors, eroding trust in institutions.

Measures Taken by the Government:

1. Demonetization: The government demonetized high-denomination currency notes in 2016 to curb black money circulation.
2. Digital Transactions: Promoting cashless transactions enhances transparency in financial dealings, making it harder to hide income.
3. Tax Reforms: Implementation of the Goods and Services Tax (GST) and reforms in the Income Tax Act to ensure better tracking of transactions.
4. Investigative Agencies: Strengthening agencies like the Enforcement Directorate (ED), Central Bureau of Investigation (CBI), and Income Tax Department to detect and prosecute black money cases.

These measures aim to reduce black money’s prevalence and promote a more transparent and accountable economic system.