Black Money: Black money is funds earned on the black market on which income and other taxes have not been paid. The unaccounted money that is concealed from the tax administrator is called black money.

Causes of Black Money: Shortage of goods: Shortage of goods, whether natural or artificial, is the root cause of black money. Controls are often introduced to check black money.

Licensing proceeding: It is firmly believed that the system of controls permits, quotes and licences are associated with maldistribution of commodities in short supply, which results in the generation of black money.

Contribution of the industrial sector: Industrial sector has been the major contributor to black money. 

For example, the Controller of Public Limited Companies tries to buy commodities at low prices and get them billed at high amounts and pockets the difference personally.

Smuggling: Smuggling is one of the major sources of black money. When India had rigid system of exchange controls, precious metals like gold and silver, textiles and electronics goods were levied a heavy excise duty. Bringing these goods by evading the authorities is smuggling.

Tax structure: When the tax rate is high, more black money is generated.