Tax avoidance is the legal minimization of tax liability by taking advantage of loopholes and ambiguities in tax laws, while tax evasion is the illegal non-payment or underpayment of taxes by hiding income or making false claims. While tax avoidance is legal, tax evasion is a criminal offense. Tax evasion reduces government revenue and increases inflation, impacting India's economic growth and development. It also increases corruption and wealth inequality between rich and poor.

1. TAX AVOIDANCE AND TAX EVASION
-DIFFERENCE AND EFFECT ON INDIAN ECONOMY
Presented by
Ramitha p c
Master of commerce
Govt First Grade College For women,
P G Studies In commerce Holenarasipura
Under the guidance of
Sundar B. N.
Asst. Prof. & Course Co-ordinator
GFGCW, PG Studies in Commerce
Holenarasipura

2. CONTENTS
• INTRODUCTION
• MEANING
• EXAMPLES
• DIFFERENCE
• EFFECTS ON INDIAN ECONOMY
• CONCLUSION
• REFERENCE

3. INTRODUCTION
Every individual or assessee in a country dreams about to find a way in which
can avoid tax. tax avoidance and tax evasion are two terms that serves a
common purpose of to reduce the amount of tax from person ,firm or any legal
entity’s but one difference which can be drawn from these two concepts is that
one aims to do it in a legitimate manner and other strives for an illegitimate
manner. tax evasion and tax avoidance are two techniques which are used and
applied by many people for the purpose of reducing their tax liability .Tax
avoidance is a completely legal procedure while tax evasion is considered to be
crime in the whole world .

4. WHAT IS TAX AVOIDANCE ?

5. Any person who is able to avoid
taxes is considered to be a wise
guy. It is believed tax avoidance
is a term which a tax payer
reduces his tax liabilities by
taking advantage of the
loopholes and ambiguities in
the legal provisions since it is
not illegal ,tax avoidance is
some sort of a legally allowable
way to reduce the tax burden.

6. EXAMPLES OF TAX AVOIDANCE
• Taking legitimate tax deductions to minimize business
expenses and lower your business tax bill .
• Taking tax credits for spending money for legitimate
purposes ,like taking a tax credit for giving your
employees paid family leaves.

7. WHAT IS TAX EVASION?
Tax evasion is a crime in which an
individual or a business entity
intentionally underpays or hide their
certain amount of income in order to
save more amount of taxes .This
method is certainly illegal countries
.Tax evasion is basically non payment
of taxes by means of Nat reporting all
taxable income ,or by taking not
allowed deductions .

8. EXAMPLE OF TAX EVASION
• Providing false information to the IRS about business
income or expanses
• Overstating the amount of deductions
• Keeping two sets of books
• Making false entries in books and records

9. DIFFERENCE BETWEEN TAX AVOIDANCE AND TAX
EVASION

10. BASIS FOR COMPARISION TAX AVOIDANCE TAX EVASION
MEANING Minimization of tax liability,
by taking such means which
do not violate the tax rules is
tax avoidance .
Reducing tax liability by using
illegal ways is known as tax
evasion
WHAT IS IT ? Hedging of tax . Concealment of tax .
ATTRIBUTES Immoral in nature which
involves bending the law
without breaking it .
Illegal and objectionable ,both
in script and moral .
CONCEPT Taking unfair advantage of
the short comings in the tax
law .
Deliberate manipulations in
account resulting in fraud.
TYPE OF ACT Legal Criminal
HAPPENED WHEN Before the occurrence of tax
liability.
After tax liability arises.

11. TAX AVOIDANCE AND TAX EVASION –EFFECT
ON INDIAN ECONOMY

12. • Tax evasion has been causing reduction in country's economic
growth
• The direct effect of tax evasion is the loss of revenue, and
increase in inflation
• Impact on morale
• Increase in corruption
• Increase in prices of land and houses

13. • Block money has consulted in transfer of funds from India to foreign
countries through clandestine channels which decrease country's reputation
globally
• Tax evasion leads to poor standards of living of the rural masses and the
people bpl as the government cannot undertake welfare measures at the
national level
• Majority of the developmental activities do not take place due to tax evasion
• It also brings disequilibrium in the rich becoming richer and the poor
becoming poorer .

14. CONCLUSION
It is concluded from the above discussion that tax avoidance
and tax evasion are those concept which enables a person to
avoid liability on this income tax changed on concept is a
completely legal as provided under income tax act 1961 and
another is a complete illegal for the purpose of tax avoidance
,government has provided various way in which a person can
legally restrain tax on his income whereas on the other hand
government has given various penalties on the concept of tax
evasion .

15. REFERENCE
• https://www.google .com /amp/s/taxguruin/income-tax/tax-avoidance-
tax-evasion
• https://www.economicshelp.org/blog/glossary/tax-avoidance