DMPQ: What is the difference between Tax evasion and Tax avoidance? What are the methods of Tax evasion?

 

Tax avoidanceTax evasion
Legal way of saving taxes.Illegal in a financial system
Recording of incomeNot recording of income.
Help in saving, at the same time money can be channelized for economic growthHelp in saving, but since money is not accounted. Money cannot be channelized for economic growth.

 

Positive extrenalitiesNegative

 

Tools: Health scheme, donation, insurance,Tools : black money, under invoicing , smuggling, hawala

 

Different methods of Tax evasion are as follows:

  1. Failure to pay the due: not paying taxes on time.
  2. Smuggling
  3. Filing false income tax and wealth tax returns
  4. Maintaining wrong financial statements, showing forged profit and loss account.
  5. Using fake documents to claim exemptions and deductions.
  6. Sending money outside , creating swiss accounts
  7. Wrong use of Tax treaties like DTAA, round tripping
  8. Corruption

 

 

Final Destination for Haryana PSC Notes and Tests, Exclusive coverage of HPSC Prelims and Mains Syllabus, Dedicated Staff and guidence for HPSC Exams HPSC Notes brings Prelims and Mains programs for HPSC Prelims and HPSC Mains Exam preparation. Various Programs initiated by HPSC Notes are as follows:- For any doubt, Just leave us a Chat or Fill us a querry––

Leave a Comment