Challenges of Tax Administration in India: Tax Evasion and Tax Avoidance

Authors: Rishabh Gupta and Sumedha chakrabortty, Students, ICFAI Law School, Hyderabad, India



The dream of every assesse in a country is to find a way in which he can avoid tax. They would use any means or by taking the benefit of some loopholes in the Indian tax system. Tax Evasion and Tax Avoidance are two techniques which are used and applied by many people for the purpose of reducing their tax liability. Tax avoidance is completely a legal procedure while Tax Evasion is considered to be a crime in the whole world. Tax Avoidance is a practice of using all the legal means to pay the least amount of tax possible. The tax evasion occurs when individuals deliberately fail to comply with their tax obligation. It is the deliberate, misrepresentation or concealment of the true state of their affairs to the tax authorities to reduce their tax liability or to avoid the tax liability by declaring less incomes, profits or gains than actually what they earned or overstating their expenses. The resulting tax revenue loss may cause serious damage to the proper functioning of the public sector, threatening its capacity to finance its basic expenses.

Keywords: Tax Administration, Tax Avoidance, Tax Evasion


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