Tax Avoidance And Tax Evasion

1. TAX AVOIDANCE AND TAX
EVASION
PRESENTED BY:- REHANA PARVEEN AND
BHUMIKA AGGRAWAL
ROLL NO:- 3045 &3022
SUBMITTED TO TARUNIKA JAIN
MA’AM

2. TAX AVOIDANCE
❑TAX AVOIDANCE…….. It is an art of dodging tax without actually
breaking the law.
(tax avoidance means reducing the tax liability by taking the advantage
loopholes in law)
❖Example of Tax Avoidance……
i. Tax Avoidance can be done by increasing expenditure on saving
schemes.
ii. Claiming tax credits
iii. Enhancing deductions as per government rules
iv. Starting a business to enjoy tax deductible expenses
v. Investing in municipal bonds

3. Feature of Tax Avoidance
1. Nature….. Tax avoidance is legal.
2. Attributes… tax avoidance is immoral.
3. Motives ……. Tax avoidance is dodging of tax.
4. Consequences….. Tax avoidance leads to the deferment of tax liability.
5. Objective…... Tax objective of tax avoidance is to reduce tax liability by applying the script of law.
6. Permissible …….. Tax avoidance is permissible
❖Advantage of Tax Avoidance………
i. Tax Avoidance is the process of reducing the tax payable, given the
deductions applicable to taxpayers.
ii. It helps reduce the tax burden of individuals and businesses, including major
corporates.
(avoiding taxes is a legal way of decreasing the tax liabilities of a citizen or

4. Disadvantage of Tax Avoidance
i. Loss of public revenue.
ii. Serious disturbance to economy.
iii. Sense of injustice & inequality.
iv. Transfer of tax burden on shoulders of the guideless, good citizen.
v. Hidden loss to community by some of the best brain.

5. CASE STUDY: HOW EMPLOYEES SAVE THEIR TAX ON THEIR
residential house property
IN INDIA(TAX AVOIDANCE/PLANNING)…. LET ME EXPLAIN YOU
WHY

6. TAX EVASION
TAX EVASION IS AN ILLEGAL ATTEMPT TO DEFEAT THE IMPOSITION OF TAXES BY INDIVIDUALS,
CORPORATIONS, TRUSTS AND OTHERS. IN SIMPLE WORDS WHILE TAX AVOIDANCE IS TAKING
BENEFITS OF THE LOOPHOLES OF THE ACT EVASION IS ILLEGALLY DEFEATING THE
PROVISIONS OF THE LAW WHICH IS NOT FOLLOWING THE LAW AND ORDER.
EXAMPLES OF TAX EVASION
1. CLAIMING ITC ON THE ARTICLES NOT USED FOR BUSINESS
2. SHOWING FALSE RECORDS
3. HIDING INCOME BY RECEIVING IN CASH
4. CLAIMING PERSONAL EXPENSES AS BUSINESS EXPENSES

7. FEATURES OF TAX EVASION
• NATURE….TAX EVASION IS ILLEGAL
• ATTRIBUTES….TAX EVASION IS ALSO IMMORAL AS WELL AS ILLEGAL WHICH IS SUBJECT TO
PUNISHMENT AND IMPRISONMENT
• MOTIVE ….TO EVADE THE TAXES
• CONSEQUENCES…. IT LEADS TO HEAVY FINE AND PENALTY BY THE DEPARTMENT AND ALSO A
CAT EYE ON YOUR BUSINESS BY THE IT DEPARTMENT. IT ALSO LEADS TO IMPRISONMENT IN
SOME CASES
• PERMISSIBLE…TAX EVASION IS STRICTLY PROHIBITED AND NON ADVISABLE
ADVANTAGES OF TAX EVASION
BEING IT A ILLEGAL THING WE SHOULD NOT TALK ABOUT ITS ADVANTAGES BUT STILL LET US LOOK
AT SOME OF THE REASONS WHY PEOPLE DO IT ON A LARGE SCALE
1. IT HELPS THE BUSINESSES MINIMIZE OR EVEN NULLIFY THEIR TAX BURDEN
2. IT ALSO HELPS THE CONSUMERS TO SAVE THEIR TAXES ON THE GOODS PURCHASED FOR
THEIR DAILY CONSUMPTION BY SHOWING THEM AS GOODS USED IN THE BUSINESS BY A GST

8. DISADVANTAGES OF TAX EVASION
• IT CREATES A NEGATIVE IMPACT ON THE ECONOMY
• PENALITIES WHICH ARE IMPOSED IN CASE A TAX EVASION IS DETECTED BY THE
DEPARTMENT ARE AS HIGH AS 50%
• IT IMPACTS THE GROWTH OF THE ECONOMY
• IT CREATES A SENSE OF GUILT AND ANGER AMONG THOSE WHO REGULARLY AND LEGALLY
PAY THEIR TAXES
• IT IS A CRIME AND HURTS THE HUMANITY

9. DIFFERENCE BETWEEN TAX EVASION AND
AVOIDANCE

10. CASE STUDY(TAX EVASION)
CLIENT WITH 15 IPHONE GETS GST NOTICE
FOR TAX EVASION… LET ME EXPLAIN YOU WHY

11. SOURCES
1. GOOGLE- INVESTOPEDIA
2. YOUTUBE- SAHIL JAIN