This document discusses tax evasion and avoidance. It defines tax as a financial charge imposed by governments to fund public expenditures. Direct taxes are levied on personal income, while indirect taxes are levied on goods and services. Tax evasion is illegally not paying taxes when they are due, while tax avoidance uses legal loopholes to reduce taxes owed. Common methods of evasion include failing to pay taxes, smuggling, and falsifying financial statements. Tax evasion harms economies by reducing government revenues. To reduce evasion, governments can simplify tax laws, increase awareness, and strengthen penalties for noncompliance.

1. TAX EVASION AND AVOIDANCE
Prepared by:
Sarrah Kaviwala C-40
Shivani Patil C-33
Vedant Sharma C-17
Himani Singh C-27
Devesh Pandey C-46
Disha Mahawar D-20

2. WHAT IS TAX?
A tax is a Financial charge
or other levy imposed
upon a tax payer by a
state to fund various
public expenditure.
In other words a fee
charged by a government
on a product, income or
activity.
If tax is levied directly on
personal income then it is
Direct Tax.
If tax is levied on price of
goods and services then it
is called indirect tax.

3. TYPES OF TAXES
 Direct Taxes
1. Income Tax
2. Capital Gain Tax
3. Corporate Tax
 Indirect Taxes
1. Sales Tax
2. Custom Duty and
Octroi
3. Excise Duty

5. MEANING OF TAX EVASION
 Tax Evasion is not
paying the taxes when
they are actually due
which is absolutely
illegal.

6. SOME WAYS OF TAX EVASION
I. Failing to pay the due
II. Smuggling
III. Inaccurate Financial statement
IV. Bribery
V. Storing wealth outside the country

7. TAX AVOIDANCE
 Tax avoidance is
basically finding the
loophole that exempts
you from paying taxes
and it is not strictly
illegal.

8. METHODS OF TAX AVOIDANCE
 Deduction available in case of minor child
 There is no tax on long term gains
 Adult Children are big tax savers
 Tax is not implied in case of parents
 Show the monetary transaction as loan

9. DIFFERENCE BETWEEN TAX EVASION AND
TAX AVOIDANCE

10. MAIN CAUSES OF TAX
EVASION IN INDIA
Low level of Voluntary Tax
Compliance
Weak Enforcement of Tax Laws

11. MANIPULATION OF ACCOUNTS FOR TAX
EVASION
 Out of book transactions
 Manipulation of sales/ receipts
 Under reporting of production
 Manipulation of Expenses
 Manipulation of Capital

12. ECONOMIC CONSEQUENCES OF TAX EVASION

13. ILL-EFFECTS OF TAX EVASION

14. MEASURES TO COMBAT TAX EVASION
A. Reduction of Tax rates by the Government
B. Simplified Tax Laws and Procedures
C. Well Organised and Autonomous Administration
Structure
D. Increased Awareness among the taxpayers
E. Corruption free officials and taxpayers
F. Stronger penalties for non compliance
G. Sense of responsibilities among the tax payers
H. Use of media

15. LEGAL ISSUES OF TAX EVASION

16. LEGAL EXAMPLES
 Walter Anderson
 Cadbury India Limited case
 Vodafone tax Scandal

17. ADMINISTRATIVE ISSUES
 . To design appropriate system
 Equity based tax system
 Provisions
 Simplifications of tax procedure
 E - Filing system

18. SOURCE: REPORT RELEASED BY MINISTRY OF
FINANCE, APRIL, 2012
Slab Number in Lakhs Percentage of tax payers
0-5 lakh 288.4 89%
5-10 lakh 17.88 5.50%
10-20 lakh 13.78 4.30%
More than 20
lakh 4.06 1.30%

19. CONCLUSION
 Tax Avoidance and Tax Evasion both are meant to reduce
the tax liability ultimately, but what makes the difference
is that the former is justified in the eyes of law as it does
not make any offence or breaks any law.
 However it is biased as the honest tax payers are not
fools, but they can also make arrangements for
postponing unnecessary tax.
 If we talk about the latter, it is completely unjustified
because it is a fraudulent activity, because it involves the
acts which are forbidden by law and hence it is
punishable.

20. CONCLUSION
 Having been aware of the ill effects of tax evasion, it
becomes each one of our responsibility to support the
government by complying with the tax procedures and
pay taxes promptly.
 As it is rightly said that every drop of water makes an
ocean, it can also be said that our small contribution
makes a huge difference in the growth of the economy.
Instead of expecting for change to happen, let us be the
change agents who can bring in a drastic development
by just fulfilling our responsibilities promptly.
 If each one of us speaks the same language, then there
will be least or no scope for us to be exploited by any
institution or authority. So let us fulfil our duties first and
claim our rights next.