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TAX EVASION AND AVOIDANCE
Prepared by:
Sarrah Kaviwala C-40
Shivani Patil C-33
Vedant Sharma C-17
Himani Singh C-27
Devesh...
WHAT IS TAX?
A tax is a Financial charge
or other levy imposed
upon a tax payer by a
state to fund various
public expendit...
TYPES OF TAXES
 Direct Taxes
1. Income Tax
2. Capital Gain Tax
3. Corporate Tax
 Indirect Taxes
1. Sales Tax
2. Custom D...
MEANING OF TAX EVASION
 Tax Evasion is not
paying the taxes when
they are actually due
which is absolutely
illegal.
SOME WAYS OF TAX EVASION
I. Failing to pay the due
II. Smuggling
III. Inaccurate Financial statement
IV. Bribery
V. Storin...
TAX AVOIDANCE
 Tax avoidance is
basically finding the
loophole that exempts
you from paying taxes
and it is not strictly
...
METHODS OF TAX AVOIDANCE
 Deduction available in case of minor child
 There is no tax on long term gains
 Adult Childre...
DIFFERENCE BETWEEN TAX EVASION AND
TAX AVOIDANCE
MAIN CAUSES OF TAX
EVASION IN INDIA
Low level of Voluntary Tax
Compliance
Weak Enforcement of Tax Laws
MANIPULATION OF ACCOUNTS FOR TAX
EVASION
 Out of book transactions
 Manipulation of sales/ receipts
 Under reporting of...
ECONOMIC CONSEQUENCES OF TAX EVASION
ILL-EFFECTS OF TAX EVASION
MEASURES TO COMBAT TAX EVASION
A. Reduction of Tax rates by the Government
B. Simplified Tax Laws and Procedures
C. Well O...
LEGAL ISSUES OF TAX EVASION
LEGAL EXAMPLES
 Walter Anderson
 Cadbury India Limited case
 Vodafone tax Scandal
ADMINISTRATIVE ISSUES
 . To design appropriate system
 Equity based tax system
 Provisions
 Simplifications of tax pro...
SOURCE: REPORT RELEASED BY MINISTRY OF
FINANCE, APRIL, 2012
Slab Number in Lakhs Percentage of tax payers
0-5 lakh 288.4 8...
CONCLUSION
 Tax Avoidance and Tax Evasion both are meant to reduce
the tax liability ultimately, but what makes the diffe...
CONCLUSION
 Having been aware of the ill effects of tax evasion, it
becomes each one of our responsibility to support the...
Tax evasion and avoidance
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Tax evasion and avoidance

It is about the Tax Evasion and Tax Avoidance, their difference, causes and effects on the economy.

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Tax evasion and avoidance

  1. 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. 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. 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
  4. 4. MEANING OF TAX EVASION  Tax Evasion is not paying the taxes when they are actually due which is absolutely illegal.
  5. 5. 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
  6. 6. TAX AVOIDANCE  Tax avoidance is basically finding the loophole that exempts you from paying taxes and it is not strictly illegal.
  7. 7. 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
  8. 8. DIFFERENCE BETWEEN TAX EVASION AND TAX AVOIDANCE
  9. 9. MAIN CAUSES OF TAX EVASION IN INDIA Low level of Voluntary Tax Compliance Weak Enforcement of Tax Laws
  10. 10. MANIPULATION OF ACCOUNTS FOR TAX EVASION  Out of book transactions  Manipulation of sales/ receipts  Under reporting of production  Manipulation of Expenses  Manipulation of Capital
  11. 11. ECONOMIC CONSEQUENCES OF TAX EVASION
  12. 12. ILL-EFFECTS OF TAX EVASION
  13. 13. 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
  14. 14. LEGAL ISSUES OF TAX EVASION
  15. 15. LEGAL EXAMPLES  Walter Anderson  Cadbury India Limited case  Vodafone tax Scandal
  16. 16. ADMINISTRATIVE ISSUES  . To design appropriate system  Equity based tax system  Provisions  Simplifications of tax procedure  E - Filing system
  17. 17. 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%
  18. 18. 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.
  19. 19. 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.

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