Difference Between Tax Planning Tax Avoidance And Tax Evasion

Cornell legal information institute.

Difference between tax planning tax avoidance and tax evasion. The dividing line amidst the two concepts is thin and blur. The difference between tax planning and tax avoidance primarily depends on the difference in benefits that are availed to minimise tax burden. Businesses in search of saving tax often come up with those couples of terms. Below are key differences between tax evasion tax avoidance and tax planning to help you get better understanding.

The distinction between tax planning avoidance and evasion has been a long discussed topic in the field of taxation law and one of the foremost indian case in which the discussion was taken up was in the landmark case of mcdowell co. The difference between tax avoidance and tax evasion accessed apr. A planning made to reduce the tax burden without infringement of the legislature is known as tax avoidance. The difference between tax evasion and tax planning avoidance is relatively clear cut.

Tax avoidance can be done by adjusting the accounts in such a manner that there will be no violation of tax rules. Employment tax evasion criminal investigation ci accessed april 27 2020. The difference between tax planning and tax avoidance is that tax avoidance always increases your tax risk while tax planning either reduces it or does not increase your tax risk. Tax avoidance refers to hedging of tax but tax evasion implies the suppression of tax.

On the other hand the tax avoidance is a technique of refraining from tax liability through just and fair means but intends to defeat the fundamental motive of the legislature. Tax evasion accessed april 27 2020. Commercial tax officer wherein justice reddy stated much legal sophistry and judicial exposition both in england and india have gone into the. Accessed april 27 2020.

Iii tax avoidance is done through not malafied intention but complying the provision of law. Tax planning is an art to reduce your tax outgo by making sure that all the applicable provisions of our income tax act as designed to reduce your tax liability has been availed of. Difference between tax planning tax avoidance tax evasion. Tax evasion is blatant fraud and is done after the tax liability has arisen.

Tax crimes handbook page 2. Tax evasion is an unlawful way of paying tax and defaulter may punished. Each term has been clarified quite obviously in our above mentioned sections. The following are the major differences between tax avoidance and tax evasion.

Features and differences between tax evasion tax avoidance and tax planning. An unlawful act done to avoid tax payment is known as tax evasion. Tax avoidance is lawful but in some cases it could come in the category of crime. Criminal offence which involves the reduction of one s tax liability or obtainment of tax credits or refunds through illegal means such as the claim for fictitious or non existent expense or failure to declare taxable income.