There is no uniform definition of black money in the literature or economic theory. In fact, several terms with similar connotations have been in vogue, including ‘unaccounted income’, ‘black income’, ‘dirty money’, ‘black wealth’, ‘underground wealth’, ‘black economy’, ‘parallel economy’, ‘shadow economy’, and ‘underground’ or ‘unofficial’ economy.
All these terms usually refer to any income on which the taxesimposed by government or public authorities have not been paid. Such wealth may consist of incomegenerated from legitimate activities or activities which are illegitimate per se, like smuggling, illicit trade inbanned substances, counterfeit currency, arms trafficking, terrorism, and corruption.
In its 1985 report as Aspects of Black Economy, the National Institute of Public Finance and Policy (NIPFP) defined ‘black income’ as ‘the aggregates of incomes which are taxable but not reported to the tax authorities’.Further, black incomes or unaccounted incomes are ‘the extent to which estimates of national income andoutput are biased downwards because of deliberate, false reporting of incomes, output and transactionsfor reasons of tax evasion, flouting of other economic controls and relative motives’.
Thus, in addition to wealth earned through illegal means, the term black money would also includelegal income that is concealed from public authorities:
