Tax Planning, Tax Evasion, Tax Avoidance,

Tax Planning, Tax Evasion, Tax Avoidance,

1. TAX PLANNING Tax Avoidance Tax Evasion Tax Management Tax Planning with reference to Financial Management Decisions Capital Structure Inter Corporate Dividend and Transfer Dividend policy Bonus Shares

2. INTRODUCTION The  avid goal of every taxpayer is to minimize his Tax Liability. To achieve this objective taxpayer may resort to following Three Methods : Tax Planning Tax Avoidance Tax Evasion

3. It is well said that “Taxpayer is not expected to arrange his affairs in a such manner to pay maximum tax “ . So, the Assessee shall arrange the affairs in a manner to reduce tax. But the question what method he opts for ? Tax Planning , Tax Avoidance , Tax Evasion !

4. Tax Planning Tax Planning involves planning in order to avail all exemptions, deductions and rebates provided in Act. The Income Tax law itself  provides for various methods for Tax Planning, Investment in securities provided u/s 10(15) . Interest on such securities is fully exempt from tax. Exemptions u/s 10A, 10B, and 10BA Residential Status of the person Choice of accounting system Choice of organization.

5. Tax Planning Short term tax planning .(Saving in tax) Long term tax planning .(Shares given to son or spouse) Permissive tax planning .(Different tax concessions) Purposive Tax Planning .(correct selection of investment)

6. Tax Evasion When any individual makes false claims to reduce his total income or by not providing any information regarding his total income, then it is called as Tax Evasion. By doing so, his tax liability is reduced, and it will result in less tax being paid by him.

7. Tax Evasion A person reduce his taxable income:- By not recording sale made by him, Claiming bad debts or losses which never occurred, Making personal expenses as business expenses, Claiming false donation made under different sections like u/s 80G, By not showing capital gain , By not showing income from benami transaction , By showing excessive salary paid .

8. Tax Avoidance Tax avoidance means reducing your tax liability without breaking any law . In this an individual looks for loopholes in the law and makes most of those loopholes to reduce the tax liability. By using Tax Avoidance, you satisfy all provisions of law but in the same time you reduce your tax liability too .