While every now and then, the government keeps harping about reducing cash transactions, there are several Indians who still earn in cash heavily to evade taxes. Most of the time these people cannot invest in regular instruments like a mutual fund or a fixed deposit.
Then how do they grow their money? A detailed discussion with financial experts revealed that either these people invest in real estate or in physical gold. Despite this, they forfeit the opportunity of yielding better returns, which they could have garnered had they been not earning and investing money in cash.
Even though following demonetisation, the habit of earning and spending in cash has been arrested to some extent, the practice is still rampant. The only difference is that, people are now a bit more wary of flaunting their cash, as such, an act that might attract the taxman’s lens.
However, when this very cash starts hurting after a point of time, people start looking for appropriate avenues to park it.
Renu Maheshwari, CEO and Principal Advisor, Finscholarz Wealth Managers, says, “Over hundreds of years in India, we have developed a tradition of earning, spending, accumulating and investing in cash to stay off the radar of the alien government.”
She adds, saying, “This whole system runs smoothly parallel to the organised banking and financial channel. With an alien government, society did not treat tax evaders as financial criminals; rather they are the admired ‘Robin Hoods’ who are able to outsmart the ruler’s system. We do not feel responsible for funding the societal causes (roads and hospitals) through the system. It is the government’s job! Corrupt politicians and bureaucrats have helped perpetuate this frame of mind.”
Esta historia es de la edición November 2019 de Outlook Money.
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Esta historia es de la edición November 2019 de Outlook Money.
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