This document discusses tax evasion from the perspective of a forensic expert. It begins by defining tax evasion and tax avoidance, noting that the latter involves legally minimizing taxes while the former involves illegal means. Next, it compares tax evasion and avoidance and examines reasons for the tax gap in the UK. It then looks at global tax evasion by profession and discusses long-term remedies like tax planning and management. The document outlines ways that tax evasion occurs and who is responsible in India. It also examines some attempts at tax evasion during India's demonetization and concludes by emphasizing the importance of tax planning to curb evasion.

1. Tax Evasion:
A Forensic
Expert’s
Viewpoint
CA Vikram Shankar Mathur
BA (Eco) Hons, FCA, DISA (ICAI), FAFP (ICAI)
+91-9998090111 | +91-8460890111
Email: fcavsmathur.faculty@outlook.com
Web: https://fcavsmathurfaculty.wordpress.com
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2. Tax Evasion: Defined
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Source: https://en.wikipedia.org/wiki/Tax_evasion
Extracted: 09-Jan-2017 10:30 Hours IST

3. Tax Avoidance: Defined
– TAX AVOIDANCE: “Anyone may arrange his affairs so that his taxes shall be as low as possible; he is
not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to
increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so
arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do
right, for nobody owes any public duty to pay more than the law demands.” ~ Judge Learned Hand
(http://quotes.liberty-tree.ca/quote/learned_hand_quote_6bf7)
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4. Tax Avoidance vs Tax Evasion
Tax Avoidance Tax Evasion
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5. Comparison By Reasons:
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7. Tax Gap By Reason in UK
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8. Global Tax Evasion by Profession
(in 2009)
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9. What then are the remedies on a
long-term basis?
All individuals / corporates / firms / other legal
taxable entities (AOP / BOI / PSU / Trusts etc.)
should go for:
Tax Planning
Tax Management
Combination of Tax Planning and Tax Management
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10. What is Tax Planning?
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14. What are the ways in which tax evasion takes place?
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15. Who is responsible for Tax
Evasion in India.
 There are many ways and people who practice tax in India , mainly lawyers and
chartered accountants - always are in the lookout for ways to save tax. Some of
them, unscrupulous elements – they read between the lines of tax laws and devise
the way to evade the tax. The difference between avoidance and evasion is a thin
line , which can be judged only from point of context and facts in which the method
of saving tax was applied. One way it can be read as avoidance and another way it
can be taken as evasion ~ Prashant Thakur @http://taxworry.com – February 2,
2014.
 This is where we must mention that there are two major aspects of legally reducing
our tax liability:
 Utilizing Deductions From Income
 Taking Capital Losses
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16. Some Tax Evasion Attempts
During Demonitization
 Gold Purchases:
– In Gujarat, Delhi and many other major cities, sales of gold increased on
9 November, with an increased 20 to 30% premium surging the price as
much as 45,000 (US$670) from the ruling price of 31,900 (US$470) per
10 grams (0.35 oz).
 Multiple bank Transactions
– There have also been reports of people circumventing the restrictions
imposed on exchange transactions and also attempting to convert black
money into white by making multiple transactions at different bank
branches.
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22. Seven ways to escape tax legally when
investing in the name of family members.
 Invest gifted money in tax-free instrument
 Exhausted your 80C limit? Transfer some money to your non-
working spouse or minor child and invest that sum in a tax-free
instrument such as PPF or ELSS funds, tax free bonds and Ulips.
The gift tax rules won't apply to these relations, including any of
your or your spouse's lineal ascendants or de scendants.
Therefore, you can transfer any amount you want. Since you are
investing in a tax-free instrument, even the clubbing of income
clause won't affect your tax liability.
 Deduction available in case of minor child
 You can claim a deduction of up to `1,500 per child for two
children in case of investments made in the name of minors. This
means you can invest, say, `15,000 (or `30,000, for two kids) in a
one-year FD scheme which gives a return of 10% and be exempt
from tax.
 There is no tax on long-term gains
 Not interested in locking your money in long term investments or
fixed assets? Invest the l gift money in stocks and equity mutual
funds e and hold for more than a year. There is no capital gains
tax on equity assets held for g more than 12 months. In case of
gold and property and debt-oriented mutual funds, the holding
period is 3 years.
 The clubbing is only at the first level
 If earnings are reinvested, it will be treated as your relative's
income. This means the second year onwards, you'll have no
further tax liability on that money. You can use this strategy even
if your spouse is earning, but falls in a lower tax bracket.
 Adult children are big tax savers
 The clubbing rule does not apply once your child turns 18. Since
the person is treated as a separate individual for all tax purposes,
you can transfer money and enjoy another `2.5 lakh exemption
along with all the other deductions and benefits that other
taxpayer enjoys. You can start investing if the child is turning 18
before 31 March of that financial year and benefit for the entire
year.
 Clubbing not applicable in case of parents
 You can also invest in your parent's name and the best part is the
clubbing rules won't be applicable here. Also, there is no gift tax
on the money you give to your parents. So, make use of their a
basic tax exemption limit-`2.5 lakh for up to 60 years, `3 lakh for
those above 60 and `5 lakh if they are above 80. In case they are
exceeding the exemption limit, help them save taxes.
 Show the monetary transaction as a loan
 The clubbing provision is applicable on earnings from gifted money
. However, if you show the transaction as a loan where your
relative pays you a nominal interest, income from the investment
will not be taxable.
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Source:
http://economictim
es.indiatimes.com/
wealth/tax/seven-
ways-to-escape-tax-
legally/articleshow/
47564284.cms

23. AREAS OF TAX PLANNING IN CONTEXT OF
INCOME TAX ACT, 1961
 For the business entities already in existence:
i. Tax planning in respect of corporate restructuring;
ii. Tax planning in respect of financial management;
iii. Tax planning in respect of employees remunerations;
iv. Tax planning in respect of specific managerial decisions;
v. Tax planning in respect of Foreign Collaborations and Joint Venture
Agreements;
vi. Tax planning in the light of various Double Taxation Avoidance
Agreements.
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24. Conclusions for curbing Tax
Evasion in India
 It is essential that
organizations and individuals
alike go for Tax Planning, with
objectives such as:
a) Reduction of tax liability
b) Minimization of litigation
c) Productive investment
d) Healthy growth of economy
e) Economic stability
 Essentials of Tax Planning :
a) Up to date knowledge of tax laws and
awareness of judgments made through various
decisions of the courts.
b) The disclosure of all material information and
furnishing the same to the IT department.
c) Tax Planning should not just comply legal
provisions as stated but should be within the
framework of law.
d) A planning must be capable of attainment of
business objectives and be amenable to its
possible future changes.
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As can be seen, the
highest income
bracket of 6 entities
pay the maximum
tax of Rs. 6,872.97
Lakhs, which is
where the maximum
attention ought to be
focused.

26. On the Lighter Side
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The Cayman has almost
completely fixed its tax evasion
problem
. . . or so you would think, on reading the latest
report from its Financial Reporting Authority Cayfin.
We can't find a link to the report itself, which
doesn't seem to have been published yet, but in
any case here is a Chart depicted from a table:
===================
So let's see - that shows tax evasion at just one
percent of all suspicious activity reports.
Impressive! Time to crack open the champagne.
Even more impressive, given that its Confidential
Relationships (Preservation) Law states that you
can go to prison in Cayman not only for divulging
confidential information, but merely for asking for
it!
And then there is the whole issue of Cayman
directors as a fig leaf, which we noted (and
updated) recently.
Joking aside, we should state that while Cayman
deservedly has a terrible reputation for its secrecy,
it probably isn't as sleazy as some. Such as the
British Virgin Islands.

27. CA Vikram
Shankar
Mathur
Mobile:
+91-9998090111 / +91-8460890111
Email:
fcavsmathurfaculty@outlook.com
Official Website:
http://fcavsmathurfaculty.wordpress.com
Personal Website:
http://vsmathur.co.in
Facebook Profile
http://facebook.com/vsmathurco
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