Demonetization is the valorous step taken by the government of India. Disastrous issues in India are corruption and terrorism and the root cause of these problems are black money. So the black money is playing lead role in deprivation of our country. Various reports of reliable institution depicted the worsen situation of black money such as according to a report of “NIPFP the existence of black money in Indian economy was 31,584 in 1983 which has risen up to 10,00,000 in 2012”.It was the requirement of the moment to unearth a audacious step to tackle the various problem regarding black money (such as corruption and terrorism)in one major stroke. So government of India has decided to introduce demonetization of RS.500 and RS.1000 notes on 8th November 2016. The reason behind demonetization of these high denominations notes was, Rs.500 and Rs.1000 notes constitute 86.9% of total currency. This paper is throwing light on the position of black money in India and the effect of demonetization on black money.