The document discusses various aspects of taxation in India including tax evasion, tax avoidance, and the role of tax administration.
It defines tax evasion as illegally reducing one's tax burden by underreporting income or overstating deductions/expenses. Tax avoidance uses legal tax deductions and exemptions to minimize tax liability. Penalties for tax evasion range from 100-300% of evaded taxes.
The document also summarizes key provisions of the Income Tax Act related to deductions that can help taxpayers lower their taxable income such as sections 80C, 80D, and double taxation avoidance agreements. It notes direct tax collections have increased after demonetization as the number of taxpayers has risen from 3 crore
Tax Planning Concept and tax planning with specific managerial decisionsSundar B N
In this ppt most of the tax planning concepts are covered. Tax planning, Tax evasion, tax avoidance, tax planning with inter corporate dividend and Bonus share. Tax Planning with specific managerial decisions are covered.
Subscribe to Vision Academy for Video assistance
https://www.youtube.com/channel/UCjzpit_cXjdnzER_165mIiw
taxes are income of government. india is a developing country, therefore taxes is important source of income to indian government. the majority of taxes which are mostly collected by the government is included in this presentation.
This PPT is mainly on the basics of International Taxation which is confusing for many students and many professionals too nowadays. During this evolving world of multinational culture, International Taxation has gained significant importance of which all the professionals should be aware of.
I have tried to compile the concepts of international taxation in this PPT except the concept of Transfer Pricing which in itself is like a whole book.
I have inserted the core concepts which lead to the emergence of International Taxation in India.
Understanding Indian Tax Evasion & Its Consequences.pdfyamunaNMH
Tax evasion is an illicit practice used by people and businesses to evade paying taxes. In India, there are several ways to avoid paying income taxes. Since taxes are regarded as a significant source of funding for the government, tax evaders are subject to penalties imposed by the Indian government.
Tax Planning Concept and tax planning with specific managerial decisionsSundar B N
In this ppt most of the tax planning concepts are covered. Tax planning, Tax evasion, tax avoidance, tax planning with inter corporate dividend and Bonus share. Tax Planning with specific managerial decisions are covered.
Subscribe to Vision Academy for Video assistance
https://www.youtube.com/channel/UCjzpit_cXjdnzER_165mIiw
taxes are income of government. india is a developing country, therefore taxes is important source of income to indian government. the majority of taxes which are mostly collected by the government is included in this presentation.
This PPT is mainly on the basics of International Taxation which is confusing for many students and many professionals too nowadays. During this evolving world of multinational culture, International Taxation has gained significant importance of which all the professionals should be aware of.
I have tried to compile the concepts of international taxation in this PPT except the concept of Transfer Pricing which in itself is like a whole book.
I have inserted the core concepts which lead to the emergence of International Taxation in India.
Understanding Indian Tax Evasion & Its Consequences.pdfyamunaNMH
Tax evasion is an illicit practice used by people and businesses to evade paying taxes. In India, there are several ways to avoid paying income taxes. Since taxes are regarded as a significant source of funding for the government, tax evaders are subject to penalties imposed by the Indian government.
Income tax is generally considered as Complicated subjects, so in this HAND BOOK we covered entire syllabus in such a manner in easiest language that student find it intresting.
In the rule, income tax refers to a percentage of your salary that you must pay to the government. During this immediate duty course, the Government uses the money collected for infrastructure improvements and to pay workers for focal and state government agencies.
Direct taxes and indirect taxes are the two most common types of taxes. Direct taxes, such as income tax, are imposed directly on the pay obtained. During that monetary year, the rates that apply to the pay sections determine the tax estimation.
•What is income tax –Best income tax lawyer in lucknow.pptxGabrielLechner1
Income tax is a tax that governments impose on individuals' earnings or income, including wages, salaries, dividends, interest, rental income, and other sources of income. The purpose of income tax is to generate revenue for the government to fund public services, infrastructure, and other expenditures.
Income tax is usually progressive, meaning that higher-income individuals are taxed at higher rates. Tax rates and brackets can vary significantly between countries, and some countries may also have different tax rates for different types of income (e.g., earned income vs. investment income).
Taxpayers are typically required to file tax returns annually, reporting their income and calculating the amount of tax they owe based on the applicable tax rates and deductions. Taxpayers may also be eligible for various tax credits and deductions that can reduce their taxable income or the amount of tax they owe.
Governments use various methods to collect income tax, such as withholding taxes from paychecks (pay-as-you-earn or PAYE system), estimated tax payments for self-employed individuals, and annual tax return filings for individuals and businesses.
Overall, income tax is a crucial component of a country's tax system, providing essential revenue for government operations and public services while also influencing economic behavior and wealth distribution.
There are several reasons why taxes are necessary. First and foremost, taxes provide the government with the funds needed to finance essential public services and projects that benefit society as a whole. These services include maintaining roads and bridges, funding public schools and universities, providing healthcare services, and ensuring public safety through law enforcement and emergency services.
Additionally, taxes play a crucial role in redistributing wealth and reducing economic inequality. Progressive tax systems, for instance, require higher-income individuals to pay a larger percentage of their income in taxes, while lower-income individuals pay a lower percentage. This helps ensure that wealthier individuals contribute proportionally more to society's needs and helps fund social welfare programs that support disadvantaged populations.
Furthermore, taxes can be used as a tool to influence economic behavior and achieve policy objectives. For example, governments may use tax incentives or penalties to encourage environmentally friendly practices, promote investment in specific industries or regions, or discourage harmful activities such as smoking or excessive consumption of sugary drinks.
In summary, taxes are necessary for funding public services, reducing economic inequality, and achieving various policy goals that benefit society as a whole. While they may be a source of contention for some, they are a fundamental aspect of modern governance and play a vital role in shaping the economic and social landscape of a country.
Tax planning is the analysis of a financial situation or plan to ensure that all elements work together to allow you to pay the lowest taxes possible. A plan that minimizes how much you pay in taxes is referred to as tax efficient. Tax planning should be an essential part of an individual investor's financial plan.
Section 80D provides taxpayers with tax deductions on the premium paid towards health insurance policies for self, parents, spouse, and children. The taxpayers are can claim the following amounts as deductions under Section 80D: i) Up to Rs 25,000 on the premium for health insurance availed for self, spouse, and children. ii) If your parents are covered under the insurance policy, then a maximum deduction of Rs 50,000 is allowed. iii) If either of your parents is a senior citizen, then the maximum deduction allowed is Rs 75,000.
Now, let’s see how Akash can utilise the provisions of Section 80D to save taxes. He buys a health policy for himself by paying a premium of Rs 20,000. He later decides to cover his parents as well under the policy. He spends an additional Rs 53,000 to do so. Akash’s father is aged 61 years. Hence, he can avail an additional deduction of up to Rs 50,000 towards the premium paid to cover his father. Thus, Akash can claim Rs 70,000 paid by him (Rs 20,000 for covering self and Rs 50,000 for covering parents, one of whom is a senior citizen) under Section 80D this year. He saves Rs 21,840 in taxes under this Section.
Honourable Finance Minister Nirmala Sitharaman has presented her second Union Budget in the Parliament on 01 February 2020. This Budget focused on bringing a series of measures aimed at promoting investments in the country, creating a world class infrastructure and stimulating economic growth.
We bring you our analysis of Direct Tax proposals announced by the Hon'ble Finance Minister at her budget speech. Some of the key takeaways are highlighted below:
• 15% concessional tax regime for new domestic manufacturing companies will now be applicable to Power-generating companies as well;
• Alternative personal tax regime made available for Individual/ HUFs
• Abolition of Dividend Distribution Tax (DDT);
• Advance Pricing Agreement and Safe Harbour Rules to cover Income Attribution to a Permanent Establishment (PE);
• Thin Capitalization provisions liberalized and have been made inapplicable to a debt provided by PE of non-resident engaged in the business of banking in India;
• TDS on e-commerce transactions;
• TCS on overseas remittances under Liberalised Remittance Scheme (LRS), purchase of overseas tour packages and purchase of goods;
• Threshold of residency for citizens & PIOs visiting India reduced from 182 days to 120 days. Further, definition of ‘Not ordinarily resident’ is also narrowed;
• Donations to charitable institutions made to be pre-filled in IT return form to claim exemptions for donations easily. Further the Income Tax exemption approvals to Charitable Institutions is made subject to renewal every five years
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The Roman Empire, a vast and enduring power, stands as one of history's most remarkable civilizations, leaving an indelible imprint on the world. It emerged from the Roman Republic, transitioning into an imperial powerhouse under the leadership of Augustus Caesar in 27 BCE. This transformation marked the beginning of an era defined by unprecedented territorial expansion, architectural marvels, and profound cultural influence.
The empire's roots lie in the city of Rome, founded, according to legend, by Romulus in 753 BCE. Over centuries, Rome evolved from a small settlement to a formidable republic, characterized by a complex political system with elected officials and checks on power. However, internal strife, class conflicts, and military ambitions paved the way for the end of the Republic. Julius Caesar’s dictatorship and subsequent assassination in 44 BCE created a power vacuum, leading to a civil war. Octavian, later Augustus, emerged victorious, heralding the Roman Empire’s birth.
Under Augustus, the empire experienced the Pax Romana, a 200-year period of relative peace and stability. Augustus reformed the military, established efficient administrative systems, and initiated grand construction projects. The empire's borders expanded, encompassing territories from Britain to Egypt and from Spain to the Euphrates. Roman legions, renowned for their discipline and engineering prowess, secured and maintained these vast territories, building roads, fortifications, and cities that facilitated control and integration.
The Roman Empire’s society was hierarchical, with a rigid class system. At the top were the patricians, wealthy elites who held significant political power. Below them were the plebeians, free citizens with limited political influence, and the vast numbers of slaves who formed the backbone of the economy. The family unit was central, governed by the paterfamilias, the male head who held absolute authority.
Culturally, the Romans were eclectic, absorbing and adapting elements from the civilizations they encountered, particularly the Greeks. Roman art, literature, and philosophy reflected this synthesis, creating a rich cultural tapestry. Latin, the Roman language, became the lingua franca of the Western world, influencing numerous modern languages.
Roman architecture and engineering achievements were monumental. They perfected the arch, vault, and dome, constructing enduring structures like the Colosseum, Pantheon, and aqueducts. These engineering marvels not only showcased Roman ingenuity but also served practical purposes, from public entertainment to water supply.
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The map views are useful for providing a geographical representation of data. They allow users to visualize and analyze the data in a more intuitive manner.
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We all have good and bad thoughts from time to time and situation to situation. We are bombarded daily with spiraling thoughts(both negative and positive) creating all-consuming feel , making us difficult to manage with associated suffering. Good thoughts are like our Mob Signal (Positive thought) amidst noise(negative thought) in the atmosphere. Negative thoughts like noise outweigh positive thoughts. These thoughts often create unwanted confusion, trouble, stress and frustration in our mind as well as chaos in our physical world. Negative thoughts are also known as “distorted thinking”.
Unit 8 - Information and Communication Technology (Paper I).pdfThiyagu K
This slides describes the basic concepts of ICT, basics of Email, Emerging Technology and Digital Initiatives in Education. This presentations aligns with the UGC Paper I syllabus.
Students, digital devices and success - Andreas Schleicher - 27 May 2024..pptxEduSkills OECD
Andreas Schleicher presents at the OECD webinar ‘Digital devices in schools: detrimental distraction or secret to success?’ on 27 May 2024. The presentation was based on findings from PISA 2022 results and the webinar helped launch the PISA in Focus ‘Managing screen time: How to protect and equip students against distraction’ https://www.oecd-ilibrary.org/education/managing-screen-time_7c225af4-en and the OECD Education Policy Perspective ‘Students, digital devices and success’ can be found here - https://oe.cd/il/5yV
The Indian economy is classified into different sectors to simplify the analysis and understanding of economic activities. For Class 10, it's essential to grasp the sectors of the Indian economy, understand their characteristics, and recognize their importance. This guide will provide detailed notes on the Sectors of the Indian Economy Class 10, using specific long-tail keywords to enhance comprehension.
For more information, visit-www.vavaclasses.com
2. TAX PAY IN INDIA
The Constitution of India in schedule VII in the Union List ( Entry
82) has given the power to the Central Government to levy a tax on
any income other than agricultural income, which is defined in
Section 10(1) of the Income Tax Act, 1961.
The citizens of the country are governed by tax laws integrated in
Income Tax Act, 1961, Income Tax Rules, 1962, Notifications and
Circulars issued by the Central Board of Direct Taxes (CBDT),
Annual Finance Acts and judicial pronouncements by the Supreme
Court and High Courts..
3. TAX EVASION AND TAX AVOIDANCE
TAX EVASION
The term “tax evasion” refers to the evasion from paying tax. It is a
method by which taxpayers evade from paying income tax and
illegally reduce their tax burden by reducing their income or
increasing their expenditure. These two factors help the tax payers
to assign a reason to evade from paying income tax. Tax evasion is
illegal in India as it goes against tax laws in India which mandates
for all persons to pay income tax.
To check an eye on the evasion of tax on account on taxpayers, the
Income Tax Department accurately collects data and analyze on the
basis of older data and compare with the data collected on the
present number of tax payers in the financial year.
Under section 271(C) of Income Tax Act, there is a 100% to 300%
penalty of the tax evaded if someone is caught evading tax. The tax
evasion varies under certain conditions.
4. TAX PAYERS IN INDIA
The government imposes payment of tax on taxable income of all
the persons from individuals, Hindu Undivided Families ( HUF’s),
companies, firms, LLP, association of persons, body of individuals,
local authority and any other artificial juridical person (Section
2(31) of Income Tax Act, 1961). Imposition of tax depends upon the
residential status of the individuals in the society.
The Central Board of Direct Taxes administers the Income Tax
Department, which is a part of department of revenue under the
Ministry of Finance, Govt. of India.
The income tax is filed aggregating incomes from various sources.
The sources are-
Salary income, House Property income and Business Income,
Long term capital gains, Short term Capital gains and other
sources of income.
5. CAUSES OF TAX EVASION
Illegal Activities- It includes the criminal component of black
money involving a host of host of activities of anti-social in nature
as smuggling of goods, forgery, embezzlement, counterfeit currency
and other financial frauds, production or trade of contraband goods
, illegal mining and falling of forests, hoarding and black marketing
of price-controlled materials and services, theft, robbery,
kidnapping and extortion, human trafficking, sexual exploitation,
and blackmailing, bribes to public offices to secure factors such as
altering land use, regularizing authorized constructions, speed
money to circumvent/fast-track procedures, and commission to
secure government orders. These illegal activities reflect the
declining social and moral values and are punishable under the
various acts of the Central and State Governments and also the
schedule of Prevention of Money Laundering Act, 2002.
6. CONT..
Legal Activities- Due to the high level of tax rates, tax payers tend
to evade from paying taxes. The tax laws appear to be lenient in the
countries where there high tax rates of tax evasion. The people pay
less heed to the tax laws and prospect of the government with
regard to the growth of the economy. Tax evasion by politicians,
bureaucrats and industrialists sends wrong signals to the
middlemen who opt for not paying taxes. The non-compliance to
the rules and regulations to regulation of taxable income leads to
high number of tax evasions in an economy. It often occurs due to
the failure on the part of the government to implement schemes and
laws to tackle the problem of tax evasions. The high tax evasion
may account due to the lacunas in the tax laws about imposing
taxation on certain sections of the economy and exempting a
specific class. Since India is an agricultural economy, large
population is engaged in the agricultural activity. It also leads to
evasion in the significant taxable income.
7. CONT.
Tax evasion increases the concentration of black money into the
hands of undeserving groups of the society. This concentration is
likely to cause harm to the growth of the economy and restricts the
improvement in the downtrodden sections of the society.
Unsocial activities like bribery, intimidation, blackmailing,
tampering with official records, submitting fake documents, etc. are
all abuses degrading social and moral values that ultimately go with
tax evasion.
Tax evasion makes it difficult for the Income tax officers to detect
the tax dodgers and analysis because every time, data collection
may not be accurate and may lead to waste of time.
8. CONSEQUENCES OF TAX EVASION
Tax evasion results in black money prevents the resource
mobilization efforts of the government. Shortage of funds distorts
implementation of developmental plans and forces the government
to resort to deficit financing in case of public funds are required.
Tax evasion act in contradiction with the economic policies of the
government resulting in distortion in the investment patterns of
investors in India. Thus it leads to less availability of resources in
the economy.
Tax evasion undermines the efforts of honest taxpayers in India. So
they do deliberate returns filing whiling disclosing the incomes
from various sources. The increase in tax evasion uplifts the tax
burden of tax bearers in India.
Tax evasion yields the hoarding of money acquired through illegal
means. The counterfeiting of the Indian currency along with the
black money is transacted to other countries to execute criminal
activities.
9. TAX AVOIDANCE
Tax avoidance basically means making use of the tax laws by a
taxpayer to minimize his tax liability. There are various deductions
a taxpayer can claim from his total income which would bring down
his taxable income and thereby reduce his taxation. There are
important deductions which can be claimed under the provisions of
Income Tax Act, 1961. There are important deductions under
Section 80C of Income Tax Act, 1961 through which a taxpayer can
reduce his tax liability.
Section 80C of Income Tax Act
Under section 80C, a deduction of Rs 1,50,000 can be claimed
from your total income. In simple terms, the taxable income can be
reduced up to Rs 1,50,000 through section 80C. This deduction is
allowed to an Individual or a HUF. A maximum of Rs 1,50,000 can
be claimed for the FY 2018-19.
10. PROVISIONS IN INCOME TAX ACT, 1961
So if one has paid excess taxes, but have invested in LIC, PPF,
Mediclaim, incurred towards tuition fees etc., and have missed
claiming a deduction of the same under 80C, one can file their
income tax return, claim these deductions and can get a refund of
these excess taxes paid.
Section 80CCC- Insurance Premium
Deduction for premium paid for Annuity Plan of LIC or other Insurer
This section provides a deduction to an individual for any amount paid
or deposited in any annuity plan of LIC or any other insurer. The
plan must be for receiving a pension from a fund referred to in
Section 10(23AAB). Pension received from the annuity or amount
received upon surrender of the annuity, including interest or bonus
accrued on the annuity is taxable in the year of receipt.
Section 80CCD- Pension Contribution
Deduction for contribution to Pension Account
a. Employee’s contribution- Section 80CCD(1) is allowed to an
individual who makes deposits to his/her pension account.
Maximum deduction allowed is 10% of salary( in case the taxpayer
is an employee) or 20% of gross total income( in case the taxpayer
being self-employed ) or Rs 1,50,000, whichever is less.
11. PROVISIONS IN THE INCOME TAX ACT, 1961
b. Deduction for self-contribution to NPS- Section 80CCD(1B)
A new section 80CCD (1B) has been introduced for an additional
deduction of up to Rs 50,000 for the amount deposited by a
taxpayer to their NPS account. Contributions to Atal Pension Yojana
are also eligible.
c. Additional deduction is allowed for employer’s contribution to
employee’s pension account of up to 10% of the salary of the
employee. There is no monetary ceiling on this deduction.
Section 80D- Medical Insurance
Deduction under this section is available to an individual or a HUF. A
deduction of Rs. 25,000 can be claimed for insurance of self,
spouse and dependent children. An additional deduction for
insurance of parents is available to the extent of Rs. 25,000 if they
are less than 60 years of age or Rs 50,000( has been increased in
Budget 2018 from Rs 30,000) if parents are more than 60 years
old.
12. PROVISIONS IN THE INCOME TAX ACT, 1961
Section 80D- Disabled dependent
This deduction is available to a resident individual or a HUF and is
available on:
a. Expenditure incurred on medical treatment (including nursing),
training and rehabilitation of handicapped dependent relative.
b. Payment or deposit to specified scheme for maintenance of
dependent handicapped relative.
(i) Where disability is 40% or more but less than 80%- fixed
deduction of Rs.75,000.
(ii) Where there is severe disability ( disability is 80% or more)-
fixed deduction of Rs.1,25,000.
To claim this deduction a certificate of disability is required from
prescribed medical authority.
13. DOUBLE TAXATION AVOIDANCE
AGREEMENT (DTAA)
Double taxation refers to imposition of taxation on a taxpayers if he
is a resident of one country and earning income in other country.
Double tax liability can be avoided by many ways. India has signed
DTAA treaty with 88 countries out of which 85 have entered into
force. There is variation of tax rates and jurisdiction for specified
types of income between India and other country. Under the Income
Tax Act, 1961 there are two provisions, Section 90 and Section 91,
which provide specific relief to taxpayers to save them from double
taxation. Section 90 provides bilateral relief to the taxpayer which
means if a tax payer has paid tax in a country with India has signed
a DTAA and Section 91 provides unilateral belief to the taxpayer
which means if a tax payer has paid tax in a country with which
India has not signed a DTAA. Thus India gives relief to both kinds
of taxpayers. The rates differ from country to country. In addition
to the provisions, if any conflict arise between the provisions of
Income Tax Act or DTAA, the provisions of DTAA would prevail.
14. DIRECT TAX COLLECTIONS BEFORE AND
AFTER DEMONETISATION
There has been literal decrease in the number of tax evaders post
demonetisation. The direct tax collection before demonetisation
was much lesser than what it comes to be now. The number of tax
payers has increased from 3 crores to more than 5 crores ( FY:
2013-14: 3,31,47,372 to FY: 2017-18: 5,43,91,232).There has been
growth in direct tax collections after demonetisation.
0
200000
400000
600000
800000
1000000
1200000
Rs.(inCrores)
Direct Tax
Collections
15. BENEFITS OF DECLARATION
No wealth tax on assets declared
No scrutiny or enquiry under Income-Tax Act and Wealth Tax Act
in respect of declaration.
Immunity from prosecution under Income-tax Act and Wealth-tax
Act in respect of declaration.
Immunity from Benami Transactions (Prohibition) Act, subject to
transfer of assets by the benamidar to the real owner.
Explanation- The benefits of the declaration exempts the taxpayer
from liability of paying wealth tax. There will no scrutiny or
enquiry under Income Tax Act and Wealth Tax Act in respect of
declaration as there are already lot of complexities by collating
information about assets from various sources. Moreover, it creates
a lot of confusion while doing calculations. There will be no
prosecution if a taxpayer honestly declares his undisclosed income.
This scheme can be seen as a relief to the taxpayers or even tax
evaders to get a chance to skip legal proceedings.
16. INCOME DISCLOSURE SCHEME, 2016
This scheme was designed to declare the undisclosed income.
Who can make a declaration?
According to this scheme, all ‘persons’, such as individuals, HUF,
companies, firms, association of persons (AOPs) etc., are eligible to
make declaration under the scheme.
Scope & Coverage of Scheme
Declaration can be made in respect of-
any undisclosed income
Investment in any asset representing undisclosed income.
Amounts payable by declarant
45% of undisclosed income declared.
17. Scheme does not apply if:-
If the notification has been issued under Section
142(1)/143(2)/148/153A/153C of Income Tax Act, 1961.
Determination of fair market value under the scheme
Rule 3 of IDS Rules prescribe the method of determining Fair
Market Value (FMV) assets, including:-
Drawings, Paintings, Sculptures or any other
work of art
Bullion, Jewellery or precious
stone
Archaelogical
Collections
Shares & Securities
(quoted &unquoted)
Immovable
property
Interest in a
partnership firm
18. PENALTIES UNDER THE INCOME TAX ACT
A timely and consistent paying of taxes is very necessary for any
taxpayer to avoid any future liability or legal proceedings. To ensure
that no taxpayer does default on disclosing his income or asset, the
Income Tax Act has been legislated to keep an eye on the tax
dodgers. There are several provisions prescribed under the Income
Tax Act. The penalties which are imposed on a taxpayer to evade
tax are:-
1. Default in making payment of tax
The amount of penalty imposable will be as determined by as
determined by the assessing officer. However, the amount will not
exceed the amount of tax in arrears.
2. Under-reporting of income
If the income assessed/reassessed exceeds the income declared by
the assessee, or in cases where return has not been filed and
income exceeds the basic exemption limit, penalty at 50% of
19. PENALTIES UNDER THE INCOME TAX ACT
tax payable on such under reported income shall be levisable.
200% of tax is payable if under-reporting resulted from
misreporting of income.
3. Failure to maintain books of accounts and other documents
Normally, the amount of penalty will be Rs.25,000.
In case, the assessee is a person who has entered into international
transaction, penalty will be 2% of the value of each international
transaction or specified domestic transaction.
4. Undisclosed Income
Where the income determined includes undisclosed income,
penalty will be leviable, if such income was included in the return,
and tax was paid before the end of the relevant previous year.
20. PENALTIES UNDER THE INCOME TAX ACT
5. Audit and Audit Report
If the assessee fails to get his accounts audited, or obtain audit
report, or furnish audited report, or furnish report of such auditor,
penalty will be leviable at the Rs.1,50,000 or ½ of the total
sale/turnover/gross receipts whichever is lesser.
6. TDS/TCS
Where a person fails to deduct tax at source, he will be liable to
pay a penalty equal to amount of tax which he has failed to
deduct/ pay.
Where a person fails to collect tax at source, he will be liable to
pay a penalty equal to the amount of tax which he has failed to
collect.
21. TAX EVASION AFTER GST
GST has made the detection of tax evasion easier. In the FY 2018-
19, there are detections of tax evasion by the I-T department. The
first nine months of the current fiscal year had increased tax
evasions and its detection has become more efficient under the GST
regime. The Income Tax Department has detected evasion of GST
and CGST of up to Rs 48,555 Crores,, up 50% over comparable
evasion detected in the whole of FY 2017-18. The interim budget
presented recently this year exempts liability of the small traders,
manufacturers and enterprises from paying tax if the turnover of
their business does not exceed 1.5 crores. Moreover, the TDS is
now deducted from the interest income from the deposits in the
banks and post-offices up to 40,000 as against Rs. 10,000 earlier. It
can be conclusively said that it is likely to invite more evasions in
the future. According to some experts, this annual return seems to
be cramped up with too many details which can breed confusion
among the taxpayers.
22. CASES
Principal Commissioner of Income-tax v. Aarham Softronics (2019)
The Supreme Court held that an assessee who sets up a new industry
of a kind mentioned in sub-section (2) of Section 80, I-C of the Act.
(admissible for 5 years) and starts availing exemption of 100 per
cent tax under sub-section (3) of Section 80 can start claiming
exemption at same rate of 100 per cent beyond five years on ground
that assessee has now carried out substantial expansion in terms of
clause (ix) of sub-section (8) of Section 80 within aforesaid period
of ten years in its manufacturing unit. The said previous year in
which substantial expansion is undertaken would become ‘initial
assessment year’ and from that assessment year assessee would
become ‘initial assessment year’, and from that assessment year,
assessee shall been entitled to 100 per cent deductions of profits and
gains. Such deduction, would be for a total period of 10 years, as
provided in sub-section (6).
23. DIFFERENCE BETWEEN TAX EVASION AND TAX AVOIDANCE
S.NO. TAX AVOIDANCE TAX EVASION
1. Payment of tax is
avoided through
legal means.
Payment of tax is
evaded by illegal
means.
2. It is undertaken by
taking advantage of
provisions of the law
and policies of the
government.
It is undertaken by
employing unfair
means.
3. It is not performed
with malafide
intention but by
complying through
the provision of law.
It is performed
through unlawful
way of paying taxes
and defaulter may
get punishment.
24. CONCLUSION
So it can be concluded that both the concepts, tax
evasion and tax avoidance may appear similar but they
are very difficult in the context of tax liability. If one
enables a person to exempt his tax liability, by adopted
legislation, the other makes the person to evade from
paying liabilities which would help economy grow
better in the global perspective. For the purpose of tax
avoidance, the government has provided various ways in
which a person can legally restrain tax and release his
tax burden to some extent, on the other hand it also
imposes penalties on the ones who try to evade tax by
being engaged in illegal means of earning income.