difference
This query is : Resolved
Guest
Guest
(Querist)
20 November 2008
What is the difference between Tax planning& Tax Evasion?
20 November 2008
Dear amit
Under tax planning we are reducing tax burden by way of investment as specified by the Tax authority.
Tax evasion is avoidance of tax even if the tax is actualy payable by the assesee.
Tax avoidance is legal
but tax evasion is illegal
Under tax planning we are reducing tax burden by way of investment as specified by the Tax authority.
Tax evasion is avoidance of tax even if the tax is actualy payable by the assesee.
Tax avoidance is legal
but tax evasion is illegal
20 November 2008
Visit http://www.colgupta.com/neededTaxPlanning.html where these terms are explained in detail.
Extracts of few important paras from above:
Tax Planning may be defined as an arrangement of one’s financial affairs in such a way that without violating in any way the legal provision of an Act, full advantage is taken of all exemptions, deductions, rebates and reliefs permitted under the act, so that the burden of the taxation on an assessee, as far as possible, is the least. Thus, tax planning is an act within the four corners of the Act and it is not a colourable device to avoid tax.
Tax avoidance, on the other hand, is an art of dodging tax without actually breaking the law. It is a method of reducing tax incidence by availing of certain loopholes in the law. It excludes fraud, concealment or other illegal measures. In other words, ‘tax avoidance’ is a device, which technically satisfies the requirement of the law, but in fact it is not in accordance with the legislative intent.
When a person reduces his total income by making false claim or by withholding the information regarding his real income, so that his tax liability is reduced, is known as tax evasion.
Extracts of few important paras from above:
Tax Planning may be defined as an arrangement of one’s financial affairs in such a way that without violating in any way the legal provision of an Act, full advantage is taken of all exemptions, deductions, rebates and reliefs permitted under the act, so that the burden of the taxation on an assessee, as far as possible, is the least. Thus, tax planning is an act within the four corners of the Act and it is not a colourable device to avoid tax.
Tax avoidance, on the other hand, is an art of dodging tax without actually breaking the law. It is a method of reducing tax incidence by availing of certain loopholes in the law. It excludes fraud, concealment or other illegal measures. In other words, ‘tax avoidance’ is a device, which technically satisfies the requirement of the law, but in fact it is not in accordance with the legislative intent.
When a person reduces his total income by making false claim or by withholding the information regarding his real income, so that his tax liability is reduced, is known as tax evasion.
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