Tax Planning Vs Tax Evasion

Dear Friends,

My this blog is related to tell you about difference between Tax Planning and Tax Evasion.

"Tax Planning & Tax evasion both reduces Tax: but while tax planning is perfectly legal, tax evasion is equally perfectly illegal."

Tax Planning:

Tax Planning is an art and science of evaluating the alternatives and picking the one maximizes the income, but not necessarily by minimizing the tax.

Tax Evasion: It is a non-payment of taxes through illegal means such as 

• hiding income earned,

• showing artificial expenses to reduce taxable profit, 

• smuggling goods into the country without paying custom duty,

• selling goods without bills (and not so charging goods and service tax) or 

• dispatching goods without paying custom duty.

The main motive behind this type of transaction is to evade the tax payable. 

Difference between Tax Planning and Tax Evasion

• Tax planning is the legal right of the taxpayer to reduce his tax liability whether Tax Evasion is an offence punishable under the economic laws of the country.

• Tax planning helps both the Tax payer as well as the economy but Tax Evasion  adversely affects the economy and also hurts the tax evader.

• Tax Planning is the planning to reduce tax within the framework of law but Tax evasion is the evasion of the tax payable as per law by misrepresentation of facts and falsification of accounts.

• Tax Planning promotes professionalism and strengthens the economy but on the other hand corrodes the economy and places tremendous burden of the legal systems.

I hope it will be helpful to you. 

Thanks and Regards

Kulvinder Kaur

B.Com(H), MBA(Finance)

9871580806,8826566751

rightsteptoinvest@gmail.com