In the context of saving Tax, there are three commonly used practices –
Now let us understand what actually is the above three practices.
It refers to a situation where a person tries to reduce his tax liability by deliberately suppressing the income or by inflating the expenditure showing the income lower than the actual income and resorting to various types of deliberate manipulations.
Tax evasion may involve stating an untrue statement knowingly, submitting misleading documents, suppression of facts, not maintain proper accounts of income earned omission of material facts in assessments.
An assessee guilty of tax evasions is punishable under the relevant laws.
Tax avoidance is that where the taxpayer has apparently circumvented the law by using a scheme, arrangements or device though of a complex nature with the main or sole purpose of deferring, reducing or completely avoid the tax payable under the law.
Tax planning may be referred as the intelligent expert knowledge of planning a person’s affairs with a view of securing consciously providing tax benefits on the basis of the national priorities in consonance with the interests of the State and public.
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