Tax planning & tax avoidance
Querist : Anonymous
plz explain the diff between tax planning & tax avoidance. both are seem as same.
For instance, tax planning can be done by investing in specified permissible avenues eligible for deduction under section 80C or investment in an SEZ unit.
Dishonest taxpayers try to reduce their taxes by concealing income, inflation of expenses, falsification of accounts and willful violation of the provisions of the Income-tax Act. Such unethical practices often create problems for the tax evaders. Tax department not only imposes huge penalties but also initiate prosecution in such cases.
Tax avoidance is minimizing the incidence of tax by adjusting the affairs in such a manner that although it is within the four corners of the laws, it is done with a purpose to defraud the revenue. It is the act of dodging without directly breaking the law. For example if A gives gift to his wife, the income from the asset gifted will be clubbed in the hand of A. But to avoid this clubbing provision “A” decides to give gift to B’s wife and B reciprocates it by giving gift to A’s wife. This is not tax planning but tax avoidance. Such practices are not acceptable. In the words of Justice Rangnath Misra of Supreme Court in the case of McDowell & Co Limited v CTO
Querist : Anonymous
http://www.slideshare.net/ManishPunjabi1/tax-planning-in-india
2. https://www.rhncpa.com/tax-planning-vs-tax-evasion-do-you-know-the-difference/
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