Parallel Economy means an illegal economic operation or otherwise known as black money. It represents a segment which is not legitimate.It practises those activities which are contrary to the principles of economic policy pursued in an economy. It is well-known that there is a large quantity of money, income and wealth which has been and is being made owned which is unaccounted in our tax system and therefore, has not suffered tax. This form of money is known as black money.

Effects of Black Economy:

(i) False Information about the Economy
(ii) Impact on Fiscal System
(iii) Create Inequalities
(iv) Misguiding on Resource Allocation
(v) Implications for Monetary Policy

Government Measures:

(1) Penalties and Prosecutions
(2) Settlement Commission
(3) Voluntary Disclosure of Income Scheme (VDIS)
(4) Statutory Provision
(5) Tax Raids and Seizures