KIRIT P MEHTA SCHOOL OF LAW

B.B.A, LL.B (Hons.)

Third Semester

ECONOMICS III

TOPIC: Curb Tax Evasion in India

Submitted to:-

Prof. Parinaaz Mehta

School of law, NMIMS (Deemed to be university)

Submitted by:-

Aman Yadav

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 CURB TAX EVASION IN INDIA

TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION ............................................................................................1

1.1. BACKGROUND OF THE STUDY: .........................................................................1

1.2. OBJECTIVES OF THE STUDY: .............................................................................3

1.3. RESEARCH METHODOLOGY:............................................................................. 3

1.4. LIMITATIONS OF THE STUDY: ...........................................................................3

CHAPTER 2: REVIEW OF LITERATURE .........................................................................4

2.2. Elasticity of Non-Corporate Income Tax in India (Amaresh Bagchi, M. Govinda

Rao) 4

2.3. White Paper on Black Money (Mahesh C. Purohit)................................................ 4

2.4. Changing Tax Reforms in India – What Next? (Anil Talreja)............................... 5

2.5. National and Sub-National Tax Reforms (Ahad Nazir, Vaqar Ahmed) .............. 5

2.6. The Politics of India’s Unfinished Economic Reforms (Swaminathan S. Aiyar) 5

CHAPTER 3: VARIOUS ASPECTS OF TAX EVASION ................................................. 6

3.1. CAUSES OF TAX EVASION ...................................................................................... 7

3.2. CONSEQUENCES ........................................................................................................ 9

3.3. CONSEQUENCES OF TAX EVASION IN INDIA ................................................... 9

CHAPTER 4: WAYS OF TAX EVASION .......................................................................... 12

4.1. Out of Book Transactions ........................................................................................... 12

4.2. Manipulation of Books of Accounts ........................................................................... 13

CHAPTER 5: STATISTICS OF TAX EVASION IN INDIA ............................................ 14

CHAPTER 6: METHODS TO CURB TAX EVASION INDIA ........................................ 17

CHAPTER 7 : CONCLUSION ............................................................................................. 21

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 CURB TAX EVASION IN INDIA

CHAPTER 8 : BIBLIOGRAPHY ........................................................................................ 23

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 CURB TAX EVASION IN INDIA

CHAPTER 1: INTRODUCTION

1.1.BACKGROUND OF THE STUDY:

Tax avoidance is the unlawful avoidance of expenses by people, partnerships, and trusts. Tax
avoidance regularly involves citizens purposely distorting the genuine condition of their issues to
the duty specialists to decrease their expense obligation and incorporates untrustworthy
assessment announcing, for example, pronouncing less salary, benefits or gains than the sums
really earned, or exaggerating derivations. Tax avoidance is an action normally connected with
the casual economy.One proportion of the degree of tax avoidance (the "charge hole") is the
measure of unreported pay, which is the contrast between the measure of pay that ought to be
accounted for to the assessment specialists and the real sum revealed.1

Conversely, charge evasion is the lawful utilization of duty laws to diminish one's taxation rate.
Both tax avoidance and evasion can be seen as types of duty resistance, as they depict a scope of
exercises that expect to undermine a state's expense framework, albeit such arrangement of
assessment shirking isn't undeniable, given that evasion is legal, inside self-making frameworks.
In 1968, Nobel laureate financial expert Gary Becker initially speculated the financial aspects of
crime,on the premise of which creators M.G. Allingham and A. Sandmo delivered, in 1972, a
financial model of tax avoidance. This model arrangements with the avoidance of annual
expense, the fundamental wellspring of assessment income in created nations. As per the
creators, the degree of avoidance of personal expense relies upon the location likelihood and the
degree of discipline gave by law.

The writing's hypothetical models are rich in their push to recognize the factors liable to
influence rebelliousness. Elective determinations, notwithstanding, yield clashing outcomes
concerning both the signs and sizes of factors accepted to influence tax avoidance. Observational
work is needed to determine the hypothetical ambiguities. Personal tax avoidance has all the
earmarks of being decidedly impacted by the expense rate, the joblessness rate, the degree of
salary and

1 TIMESOFINDIA.COM. (2019, July 1). Tax Evasion: Penalties and other consequences under IT Act for income
tax evasion. The Times of India. https://timesofindia.indiatimes.com/business/faqs/income-tax-faqs/income-
taxevasion-know-about-penalties-under-income-taxact/articleshow/59895566.cms#:%7E:text=NEW%20DELHI
%3A%20Income%20tax%20evasion,even%20land%20 you%20in%20jail.

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 CURB TAX EVASION IN INDIA

disappointment with government. The degree of avoidance relies upon various variables,
including the measure of cash an individual or an organization has. Endeavors to sidestep annual
assessment decay when the sums included are lower. The level of avoidance likewise relies upon
the productivity of the duty organization. Defilement by charge authorities make it hard to
control avoidance. Assessment organizations utilize different intends to decrease avoidance and
increment the degree of implementation: for instance, privatization of duty enforce mentor
charge cultivating. In 2011 HMRC, the UK charge assortment organization, expressed that it
would keep on taking action against tax avoidance, with the objective of gathering £18 billion in
income before 2015.In 2010, HMRC started a deliberate pardon program that focused working
class experts and raised £500 million.

Tax avoidance is a wrongdoing in practically totally created nations, and the liable party is
obligated to fines as well as detainment. In Switzerland, numerous demonstrations that would
add up to criminal tax avoidance in different nations are treated as common issues.
Untrustworthily distorting pay in an expense form isn't really viewed as a wrongdoing. Such
issues are taken care of in the Swiss duty courts, not the criminal courts.

In Switzerland, notwithstanding, some expense wrongdoing, (for example, the intentional

distortion of records) is criminal. Additionally, respectful duty offenses may offer ascent to
punishments. It is frequently viewed as that the degree of avoidance relies upon the seriousness
of discipline for avoidance. In liberal majority rules systems, a principal issue with repressing
avoidance of neighborhood deals charges is that liberal popular governments, by their very
nature, have hardly any outskirt controls between their inward locales. In this manner, it isn't by
and large practical to uphold charge assortment on low-esteem products conveyed in private
vehicles starting with one ward then onto the next with an alternate assessment rate. Be that as it
may, sub-public governments will regularly look to gather deals charge on high-esteem things,
for example, vehicles.2

2 TIMESOFINDIA.COM. (2019, July 1). Tax Evasion: Penalties and other consequences under IT Act for income
tax evasion. The Times of India. https://timesofindia.indiatimes.com/business/faqs/income-tax-faqs/income-
taxevasion-know-about-penalties-under-income-taxact/articleshow/59895566.cms#:%7E:text=NEW%20DELHI
%3A%20Income%20tax%20evasion,even%20land%20 you%20in%20jail.

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 CURB TAX EVASION IN INDIA

Tax evasi0n destr0ying the s0cial and g00d system 0f Indian ec0n0my are undermining the
financial targets and are liable f0r sh0w and lavish c0nsumpti0n. Dark cash and tax av0idance
cultivate centralizati0n 0f m0netary f0rce in the hands 0f undesirable gatherings in the nati0n.
With the freed0m 0f limitati0n and unwinding 0f f0reign exchange c0ntr0l, new 0pen d00rs have
devel0ped f0r tax av0idance; gl0balizati0n has diminished the c0st 0f these advanced strategies
and hence, has enc0uraged age 0f dark cash. It is p0ssible that the dark cash repr0duced by the
Indian is being steered back t0 India.

1.2.OBJECTIVES OF THE STUDY:

• T0 study the vari0us aspects 0f black m0ney and tax evasi0n.

• T0 study the main reas0n behind the tax evasi0n and generati0n 0f black m0ney.

• T0 study the effectiveness 0f tax laws f0r the preventi0n 0f tax evasi0n.

• T0 find 0ut remedial measures t0 curtail and curb the tax evasi0n.

• T0 study the current status 0f curbing tax evasi0n in India.

1.3. RESEARCH METHODOLOGY:

The study has relied 0n the sec0ndary meth0d 0f research, als0 kn0wn as armchair research. The
sec0ndary meth0d 0f research is based 0n the analysis 0f sec0ndary data. Sec0ndary data is
inf0rmati0n which has already been c0llected, c0mpiled, and published by 0ther researchers.
This study is based 0n authentic sec0ndary data c0llected fr0m Vari0us s0urces, such as b00ks,
research papers, and 0nline res0urces.

1.4. LIMITATIONS OF THE STUDY:

The study is limited to a broad overview of the functioning of monopolies, and does not provide
an in-depth analysis of every aspect. As primary research is time consuming and expensive,
secondary data has been used for the study. Secondary research does not include collecting new
empirical evidence, hence, the scope of the information which this study is based on is
constrained by the availability of previous research.

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 CURB TAX EVASION IN INDIA

CHAPTER 2: REVIEW OF LITERATURE

2.1. Elasticity 0f N0n-C0rp0rate Inc0me Tax in India (Anupam Gupta)3

This research helps me t0 understand the basics 0f Tax and Tax evasi0n. In additi0n, it helps in
rati0nalising the results 0f the study when c0mpared with previ0us results. Black m0ney and tax
evasi0n have induced many empirical studies. It sh0wed that c0ntr0lling black m0ney in India is
a c0mplicated task 0nly due t0 p00r implementati0n 0f laws enhancing the s0phisticated crime in
the ec0n0my and thus creating black m0ney. With the liberati0n 0f restricti0n and relaxati0n 0f
f0reign exchange c0ntr0l, fresh 0pp0rtunities have emerged f0r tax evasi0n; gl0balizati0n has
decreased the c0st 0f these s0phisticated meth0ds.

2.2.Elasticity 0f N0n-C0rp0rate Inc0me Tax in India (Amaresh Bagchi, M. G0vinda Ra0)4

This study 0n “The Parallel Ec0n0my in India: Causes, Impacts &G 0vernment Initiatives”. He
0pines that the main reas0n behind the generati0n 0f black m0ney and tax evasi0n in India is the
p0litical system. The G0vernment here has m0re f0cused 0n making c0mmittees rather than
implementing it. He c0ncluded that laws sh0uld be effective t0 c0ntr0l black m0ney and tax
evasi0n in the c0untry.

2.3.White Paper 0n Black M0ney (Mahesh C. Pur0hit)5

“White Paper 0n Black M0ney” and 0bserved thatvi0lati0n 0f laws made by the Central and
State G0vernments beget criminal activities which, in turn,lead t0 a generati0n 0f black m0ney in
Indian ec0n0my. Mr. Nishant Ravindra Ghuge and Dr. Vivek Vasantra 0 Katfare (2016) in his
study “A C0mparative Study 0f the Tax structure 0f India c0ncerning 0ther c0untries” 0bserved
that the tax structure 0f India lags behind m0stly every indicat0r. Detailed reviews and acti 0ns

3 Anupam Gupta. (1983). Elasticity of Non-Corporate Income Tax in India. Economic and Political Weekly, 18(29),
1291-1292. Retrieved October 5, 2020, from http://www.jstor.org/stable/4372316.
4 Bagchi, A., & Rao, M. (1983). Elasticity of Non-Corporate Income Tax in India. Economic and Political Weekly,
18(35), 1539-1540. Retrieved October 5, 2020, from http://www.jstor.org/stable/4372458.
5 Mahesh C. Purohit. (1993). Adoption of Value Added Tax in India: Problems and Prospects. Economic and Political
Weekly, 28(10), 393-404. Retrieved October 5, 2020, from http://www.jstor.org/stable/4399456.

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 CURB TAX EVASION IN INDIA

fr0m the g0vernment can help simplify the tax structure. Tax Research Team (2016) in their
w0rking paper argued supp0rting dem0netizati0n and analyzedthe impact 0f it 0n Indian
ec0n0my. This paper sh0ws the effect 0f such a m0ve 0n the availability 0fcredit, spending, and
level 0f activity and g0vernment finances.
2.4.Changing Tax Ref0rms in India – What Next? (Anil Talreja)6

The Indian Tax Law regime has m0ved fr0m a c0mplex array 0f rules and regulati0ns t0 much
simplified arrangement This transf0rmati0n is telling in the c0ntext 0f recent set 0f ref0rms and
the intr0ducti0n 0f GAAR as an all enc0mpassing anti av0idance. It finds that sch a tax system
supplemented by specific excises and subsidies t0 deal with the pr0blems 0f equity, envir0nment
and s0cial needs is ideal f0r India .

2.5.Nati0nal and Sub-Nati0nal Tax Ref0rms (Ahad Nazir, Vaqar Ahmed)7

This article primarily examines the fragmented green tax regime in India , c0nsisting 0f the
Cess , the excise 0n petr0l and diesel, and 0ther tax initiatives in the c0untry, t0 under- stand
what kind 0f envir0nmental tax p0licy India. This paper evaluates inc 0me tax ref0rms in China
and India . The c0mbinati0n 0f fast inc0me gr0wth and under-indexed tax schedule in China
implies the fracti0n 0f the Chinese p0pulati0n subject t0 inc0me tax has increased fr0m less than
0.1 percent in 1986.

2.6.The P0litics 0f India’s Unfinished Ec0n0mic Ref0rms (Swaminathan S. Aiyar)14

In his study 0n “Tax Ref0rms in India: A Study 0f its Impact 0n the Revenue 0f the
G0vernment” suggested the necessity 0f c0nsci0usness 0f the Indian ab0ut the taxati0n rules and
laws that will create such an atm0sphere in which they will pay their due taxes and will n 0t
evade it and thereby feeling pr0ud in discharging their duty t 0 pay the same. The P0litics 0f
India’s Unfinished Summary: Despite at least tw0 decades 0f ref0rms, the liber- Ec0n0mic

6 Talreja, A. (2013). Changing Tax Reforms in India – What Next? National Law School of India Review, 24(2), 75-
88. Retrieved October 5, 2020, from http://www.jstor.org/stable/44283763.
7 Nazir, A., & Ahmed, V. (2020). Corridors of Knowledge for Peace and Development (pp. 81-95, Rep.) (Aneel S.,
Haroon U., & Niazi I., Eds.). Sustainable Development Policy Institute. doi:10.2307/resrep24374.15. 14 Aiyar, S.
(2011). (Rep.). German Marshall Fund of the United States. Retrieved October 5, 2020, from
http://www.jstor.org/stable/resrep18748.

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 CURB TAX EVASION IN INDIA

Ref0rms alizati0n 0f India’s ec0n0my is inc0mplete. This is primarily a by Swaminathan S.

Anklesaria Aiyar functi0n 0f p0litics.

CHAPTER 3: VARIOUS ASPECTS OF TAX EVASION8

Tax evasi0n is an illicit endeav0r t0 diminish the assessment 0bligati0n purp0sely

underann0uncing 0r n0t rep0rting available earnings 0r hiding 0ne's genuine situati0n fr0m
charge specialists. It is an issue in a creating nati 0n like India. The w0rldwide financial
c0nditi0ns crumbled p0intedly during the year2008 with a few pr0gressed ec0n0mies
enc0untering their m0st h0ned lessening in the p0st Sec0nd W0rld War peri0d.

The related unfriendly stuns spreading acr0ss creating c0untries accentuated the synchr0nized
w0rldwide l0g jam. The w0rldwide c0nditi0n entered an emergency phase f0ll0wing the
devel0ping pain am0ng huge gl0bal m0ney related establishments and the statement 0f
bankruptcy 0f Lehman Br0thers. The m0netary emergency 0f 2008 and the resultant requirement
f0r pr0tecting revenues further f0rtified the requirement f0r facilitated w0rldwide endeav0rs t0
handle the difficulties p0sed by assessment safe h0use interceded game plans f0r d0dging charge.
Different sh0ws like United Nati0ns C0nventi0ns against Illicit Traffic in Narc0tic Drugs and
Psych0tr0pic Substances, Multilaterals 0n Mutual Administrative Assistance in Tax Matters,
United Nati0ns C0nventi0n against C0rrupti0n ,United Nati0ns C0nventi0n against
Transnati0nal 0rganized Crime C0nventi0n, Internati0nal C0nventi0n f0r the Suppressi0n 0f the
Financing 0f Terr0rism, Financial Acti0n Task F0rce, and Asia/Pacific Gr0up 0n M0ney
Laundering are held every n0w and then t0 advance, enc0urage and supp0rt gl0bal c0llab0rati0n
and specialized help with the c0unteracti0n 0f and battles against c0rrupti0n.

It will assist India with getting w0rldwide participati0n in f0ll0wing, seizure, freezing, and
c0nfiscati0n 0f the returns 0f wr0ngd0ings under a wide sc0pe 0f c0mm0n lawful help
pr0visi0ns, even with nati0ns with which it has n0 arrangement. Age 0f dark cash and it is
stashing abr0ad in duty sanctuaries has prevailed c0nversati0ns and discussi0n in 0pen f0ra as 0f

8 Online, F. E. (2019, June 10). Income tax evasion: How India’s crorepatis dodge tax system. The Financial
Express. https://www.financialexpress.com/economy/how-crorepatis-are-outsmarting-indias-tax-system/1602737/.

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 CURB TAX EVASION IN INDIA

late. Every0ne is anxi0us 0ver the issue particularly after the distributi0n 0f scarcely any master
rep0rts identifying with immense estimates 0f unacc0unted pr0perty abr0ad. After upr0ari0us
disturbance in Parliament, the G0vernment 0f India has been seeking after new arrangements and
standards 0n the issue 0f dark cash and debasement in 0pen life and has c0mprised a few panels
and gr0ups t0 investigate the issue. This paper explains vari0us aspects and measurements 0f
dark cash, tax av0idance and their basic relati0nship with the p0licy and 0rganizati0n in India.
An endeav0r has likewise been made t0 examine the causes driving t0 the age and gauges 0f dark
cash and tax av0idance and present the systems embraced by the G0vernment t0 handle the issue.

SOURCE:https://www.google.com/url?sa=i&url=https%3A%2F%2F2.zoppoz.workers.dev%3A443%2Fhttps%2Fwww.jagoinvestor.com%2
F2012%2F05%2Fincome-tax- limit-5-

3.1. CAUSES OF TAX EVASION9

ILLEGAL ACTIVITIES:

9 Collosa, A. (2019, June 25). Which are the causes of tax evasion? Https://Www.Scribbr.Com/Apa-
CitationGenerator/New/Webpage/. https://www.ciat.org/which-are-the-causes-of-tax-evasion/?lang=en.

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 CURB TAX EVASION IN INDIA

It inc0rp0rates the criminal part 0f dark cash including a large gr0up 0f exercises 0f against
s0cial in nature as pirating 0f pr0ducts; imitati0n, theft, fake m0ney and different financial frauds
(f0r example Chit reserves); creati 0n/exchange 0f b00ty merchandise (f0r example 0piates,
unlawful alc0h0l and arms); illicit mining and falling 0f w00ds; accumulating and dark
sh0wcasing 0f value c0ntr0lled materials and administrati0ns; burglary, theft, grabbing and
c0erci0n, illegal expl0itati0n, sexual expl0itati0n and ext0rting; pay-0ffs t0 public w0rkplaces t0
make sure ab0ut kindnesses, f0r example, adjusting land use, regularizing appr0ved
devel0pments; speed cash t0 g0 ar0und/quick track strategies, and c0mmissi0n t0 make sure
ab0ut g0vernment buy 0rders. These criminal 0perati0ns mirr0r the declining s0cial and virtues
and are culpable under the different Acts 0f the Central and State G0vernment sand likewise the
timetable 0f Preventi0n 0f M0ney Laundering Act, 2002.

LEGAL ACTIVITIES:

Legitimately admissible m0netary exercises likewise make a gener0us part which is past
discl0sure t0 the public specialists acc0rding t0 arrangements 0f the law t0 sidestep charges. A
l0t 0f pr0cedural regulati0ns s0metimes make an impetus t0 c0ver the genuine p0siti0n and al0ng
these lines staying 0utside the rep0rted and acc0unted extent 0f 0ne's exercises.

Expanded gl0balizati0n and financial pr0gressi0n affect cr0ss-0utskirt transacti0ns resulting in

devel0ping 0pen d00rs f0r c0mplex gadgets t0 keep away fr0m charge installment adhering t0
the different charge rules 0f vari0us nati0ns and utilizati0n 0f expense sanctuaries. W0rldwide
exchange am0ng multinati0nal c0mpanies has expanded abuse 0f m0ve valuing pr0mpting
assessments that creating c0untries like India may be l0sing critical assets attributable t0 m0ve
estimating c0ntr0l.

The c0mp0nents 0r reas0ns f0r tax av0idance are the significant level 0f expense rates, less
regard t0 the G0vernment and its laws, permissive punitive activity, and nature 0f the ec0n0my.
High expense rates typically make charge evasi0n m0re enticing. Tax av0idance is m0re in th0se
nati0ns where there is general al00fness 0n the part 0f pe0ple t0wards the G0vernment and its
laws. Tax av0idance by g0vernment 0fficials imparts wr0ng signs t0 the general public
identifying with resistance with rules and laws; indulgent punitive activity additi 0nally
s0metimes enc0urages tax av0idance. Generally, nati0ns with m0derately helpless executi0n 0f

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 CURB TAX EVASION IN INDIA

guidelines tend t0 have a high p0rti0n 0f the unacc0unted ec0n0my than 0thers perf0rming
because 0f the usage 0f the same and s0und preventi0n.

3.2. CONSEQUENCES10:

The achievement of a comprehensive development procedure exceptionally relies upon the limit
of society to eradicate the shades of malice of debasement and dark cash from its very
establishments. Dark cash in every sphere of social, monetary, and political space of the nation
debilitatingly affects the institutions of administration and direct of public strategy in the nation.
Administration disappointment adversely affects the interests of helpless and disadvantageous
areas of society. The impacts of assessment evasion resulting in dark cash on Indian economy are
surely awful. A couple of results/impacts zones follows:

• Tax evasi0n resulting in black m0ney prevents the res0urce m0bilizati0n eff0rts 0f the
G0vernment. Sh0rtage 0f funds dist0rts implementati0n 0f devel0pmental plans and f0rces
the G0vernment t0 res0rt t0 deficit financing in case public expenditure is inelastic.
• Tax evasi0n interferes with the declared ec0n0mic p0licies 0f the g0vernment by dist0rting
saving/investment patterns and availability 0f res0urces f0r vari0us sect0rs 0f the ec0n0my.
• Tax evasi0n undermines the equity attribute 0f the tax system. H0nest taxpayers willingly
beard is pr0p0rti0nate tax burden, feel dem0ralized and lured t0 j0in the tax evaders’ camp.
• Tax evasi0n and black m0ney enc0urage c0ncentrati0n 0f ec0n0mic p0wer in the hands 0f
undeserving gr0ups in the c0untry which, in turn, is a threatening t0 the ec0n0my in its way.
• Evasi0n 0f tax c0nsumes time and energy 0f tax administrati0n t0 disentangle the intricate
manipulati0ns 0f tax d0dgers.
• Uns0cial activities like bribery, intimidati 0n, blackmailing, tampering with 0fficial rec0rds,
submitting fake d0cuments, etc. are all abuses degrading s0cial and m0ral values that
ultimately g0 with tax evasi0n.

10 Collosa, A. (2019, June 25). Which are the causes of tax evasion? Https://Www.Scribbr.Com/Apa-
CitationGenerator/New/Webpage/. https://www.ciat.org/which-are-the-causes-of-tax-evasion/?lang=en.

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 CURB TAX EVASION IN INDIA

3.3. CONSEQUENCES OF TAX EVASION IN INDIA:

Tax evasi0n has bad c0nsequences f0r g0vernments as well as t0 s0cieties. The effects usually
are 0f financial nature, the effects 0f the tax evasi0n are always negative and they are n 0ticed
directly and immediately in the budgetary revenue and 0f c0urse indirectly and gradually in
ec0n0my 0f c0unties ,in p0litical , s0ciety and legal implicati0ns simultane0usly :

Financial impact : Tax evasi0n decreases charge ass0rtments, pr0mpts lessen abs0lute inc0me.
Tax av0idance cuts at the very base 0f the inc0me capability 0f assessment framew0rk and
subsequently prevents the asset activati0n endeav0rs 0f g0vernment. Break 0f assets may twist
executi0n 0f impr0vement plans and p0wer the legislature t0 fall back 0n lacking financing 0r t0
credits financing fr0m abr0ad. Its essence necessitates that legislature uses assets t0 prevent
resistance, t0 distinguish its greatness, and t 0 punish its experts. S0 as t0 battle tax av0idance, the
legislature is spending part 0f their assets s0 as t0 decrease. C0sts 0f the endeav0rs 0f duty
0rganizati0n, c0sts 0f meth0ds f0r tax av0idance, and use f0r assessment and review 0f expense
f0rm. These m0ney related c0sts are br0ught ab0ut by the administrati0n t0 lessen tax av0idance.

Ec0n0mic effects : Tax evasi0n may meddle with the pr0claimed m0netary appr0aches 0f a
legislature by misshaping sparing and venture design and affecting the accessibility 0f assets t0
different areas 0f the ec0n0my. Tax av0idance brings ab0ut the l0ss 0f inc0me f0r the
administrati0n. It creates increasingly m0re dark cash, tax av0idance and dark cash result int 0
c0nvergence 0f financial f0rce in the p0ssessi0n 0f unf0rtunate gatherings in the nati0n and
deficit in g0vernment inc0mes. G0vernment res0rts t0 either decrease public c0nsumpti0ns 0r t0
give an0ther cash, in the tw0 cases, there is harm 0n the ec0n0my 0f the nati0n, in the principal
case g0vernment is f0ll0wing appr0ach s0 as t0 lessen public use. In the sec0nd, this measure
pr0mpts decline speculati0n, decline expectati0n f0r everyday c0mf0rts 0f the individuals. In the
subsequent measure pr0mpts frail buying intensity 0f m0ney, and rising c0sts. Tax av0idance
d0esn't distribute assets between the different variables 0f creati0n, pr0mpts harm underway
m0tivating f0rces, and diminishes the degree 0f m0netary g0vernment assistance. Tax av0idance
lessens the level 0f adequacy 0f assessment strategy s0 as t0 c0ntr0l expansi0n, because 0f the
disapp0intment 0f m0netary arrangement t0 ingest abundance gracefully cash. Tax av0idance is
the reas0n f0r the lull in m0netary devel0pment in nati0ns in light 0f the fact that assessments are

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 CURB TAX EVASION IN INDIA

a significant m0ney related 116 asset f0r the 0ccasi0ns 0f exhaustive impr0vement in the nati0n.
Tax av0idance is 0ne reas0n 0f j0blessness and neediness in the nati0n.

P0litical c0nsequences : The rec0gnizable pr00f 0f the p0litical impacts, the n0n-
acc0mplishment 0f the state inc0me, increment 0f the tax av0idance pr0mpts an expansi0n 0f the
financial weight, disapp0intment with respect t0 p0litical pi0neers wh0 w0n't be ch0sen in the
f0ll0wing p0litical race.

S0cial effects : Tax evasi0n leads t0 redistributi0n 0f pay fr0m the legitimate t0 expl0itative.
Tax av0idance pr0mpts penetrate 0f even and vertical value gr0up between individuals fr0m the
general public. Tax av0idance likewise gives 0rganizati0ns an unreas0nable fav0rable p0siti0n in
a seri0us market and it implies a few pe0ple d0n't pay s0mething reas0nable. Thus, there are less
finances accessible f0r netw0rk administrati0ns. Tax av0idance pr0mpts inadequate financing.
This issue additi0nally pr0mpts lack 0f financing 0f the s0cial activities, f0r example, training,
culture, 0rganizati0n and medical care.

SOURCE: Tax Evasion: Penalties and other consequences under IT Act for income tax evasion. The Times of India.
https://timesofindia.indiatimes.com/business/faqs/income-tax-faqs/income-tax-evasion-know-about-penalties-
underincome-tax

Tax Evasi0n as a type 0f cheating is characterized as the infringement undertaking and genuinely
upheld rule with the aim t0 acquire a fav0rable p0siti0n. Tax av0idance is additi0nally reflected
in the way that sidestepping charge causes hurt t0 the legislature as well as t0 0nes direct. Tax
av0idance is ethically 0ff-base. End that, tax av0idance d0esn't have fixed definiti0n, and tax
av0idance is w0rldwide w0nder. All nati0ns are experiencing that issue. N0 assessments will be
exacted 0r gathered aside fr0m by the auth0rity 0f law (Indian c0nstituti0n) Taxes here have
lawful status since it is made by a law, s0 the n0n-installment 0f duty is defiance and penetrate 0f

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 CURB TAX EVASION IN INDIA

the law s0 when citizens d0n't make g00d 0n charges 0r when they are making ext0rti0n
arrangement t0 lessen the expense risk, f0r example, th0se that happen 0n acc0unt 0f min0r
r0utineness infringement, and tax av0idance may add t0 sentiments 0f uncalled f0r treatment and
lack 0f regard f0r the law. Tax av0idance is a crime under the laws 0f pretty much every l0cale
0n the planet since it is viewed as a danger t 0 the administrati0n's capacity t0 subsidize its 0wn
tasks and there are a few qualities 0f tax av0idance, citizen c0nduct purp0sefully and
intenti0nally, tax av0idance is taking and Taxpayer f0ll0ws misrepresentati0n strategy.

CHAPTER 4: WAYS OF TAX EVASION11:

Different kinds of manipulations of financial statements resulting in tax evasion and the
generation of black money are elaborated in the following sections:
4.1. Out of Book Transactions:

This mode is typically pervasive among the miniature and little endeavors and suppliers of
unskilled and semi-talented administrations. With the end goal of avoiding detailing
exercises or the pay generated, taxpayers may turn to keeping two arrangements of books
of record – one for their own utilization to manage their own business and the other for
the administrative and duty specialists. The second set of books of record saved to fulfill
the lawful and administrative commitments for reporting to various specialists might be
controlled by discarding receipts or erroneously swelling costs to evade charges or other
administrative prerequisites. This classification additionally incorporates unaccounted
assets, investments in portions of recorded organizations through trick substances, and so
forth.

11 Tax Avoidance Is Legal; Tax Evasion Is Criminal. (n.d.). Bizfilings. Retrieved October 6, 2020, from
https://www.bizfilings.com/toolkit/research-topics/managing-your-taxes/federal-taxes/tax-avoidance-is-legal-
taxevasion-is-criminal.

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 CURB TAX EVASION IN INDIA

SOURCE: Income tax evasion: How India’s crorepatis dodge tax system. The Financial Express.
https://www.financialexpress.com/economy/how-crorepatis-are-outsmarting-indias-tax-system/1602737/.

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 CURB TAX EVASION IN INDIA

SOURCE:Tax Evasion: Penalties and other consequences under IT Act for income tax evasion. The Times
of India. https://timesofindia.indiatimes.com/business/faqs/income-tax-faqs/income-tax-evasion-
knowabout-penalties-under-income-tax

4.2. Manipulation of Books of Accounts:

C0ntr0l 0f Sales 0r receipts is the simplest strategy f0r tax av0idance. Pre0ccupati0n 0f
deals t0 ass0ciated undertakings situated in vari0us duty wards may 0ffer ascent t0 issues
related t0 internati0nal tax assessment and m0ve evaluating. The partner substance may
n0t rep0rt its exercises 0r inc0me at all 0r may sh0w deals t0 such a fake partner element
at a l0wer c0st in this way reducing its revealed benefits. C0mplex situati0n devel0ps t0
the fake partner element arranged in a l0w tax jurisdicti0n having excepti0nally l0w
expense rates. Underrep0rting 0f creati0n is an0ther gadget 0f artificially reducing charge
liability. One can c0ntr0l c0sts under vari0us heads that 0utc0me in under-ann0uncing 0f
salary with the help 0f expansi0n expenses by acquiring sham 0r expanded s0licitati0ns t0
unfamiliar substances in the structure 0f advertisement and sh0wcasing c0sts 0r
c0mmissi0n f0r buys 0r deals. An individual can remit t0 the rec0rd 0f an unfamiliar
citizen and can pull back the cash in real m 0ney 0r transmit back t0 India in the type 0f
either n0n-available receipts 0r c0llect in unacc0unted res0urces 0f the Indian tax payer
abr0ad.

CHAPTER 5: STATISTICS OF TAX EVASION IN INDIA12:

In an 0ng0ing discl0sure, the IT divisi0n expressed that s0mewhat m0re than tw0 cr0re Indians,
0r 1.7% 0f the p0pulace, paid pers0nal expense in the evaluati 0n year (AY) 2015-16. While the
quantity 0f individuals wh0 petiti0ned f0r annual duty r0se fr0m 3.65 cr0res t0 4.07 cr0res in the
2015-16 appraisal year, s0mewhat m0re than half (2.06 cr0re) really c0vered duties, as the rest
asserted salaries beneath available levels. The c0mplete annual assessment paid by pe0ple was
Rs 1.88 lakh cr0re in AY 2015-16, which is well beneath the Rs 1.91 lakh cr 0re gathered in the
AY 2014-15. In the m0re extensive p0litical talk, the way that under 2% 0f Indians pay annual

12 Data and Statistics | Department of Revenue | Ministry of Finance | GoI. (n.d.). GOVERNMENT OF INDIA.
Retrieved October 6, 2020, from https://dor.gov.in/data-statistics-list.

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 CURB TAX EVASION IN INDIA

assessment is viewed as an indicati 0n 0f far and wide av0idance. In his Budget disc0urse a year
ag0, Finance Minister Arun Jaitley asserted that India is a "charge resistant s 0ciety and such a
large number 0f individuals sidestep burdens." An0ther c0mp0nent 0f this supp0siti0n is the
c0nvicti0n that m0st Indians under-rep0rt their pay.

SOURCE:https://www.google.com/url?sa=i&url=https%3A%2F%2F2.zoppoz.workers.dev%3A443%2Fhttps%2Fwww.rbi.org.in%2FScripts%2FPublicationsVi
ew.aspx%3Fid%3D19240&psig=AOvVaw2k2vG795_ybjAJR89W5B_o&ust=1602052037706000&source=images
&cd=vfe&ved=0CAIQjRxqFwoTCNCcw5Krn-wCFQAAAAAdAAAAABAg.

With black m0ney turning int0 a significant idea f0r ide0l0gical gr0ups, the discernment that
numer0us Indians d0n't pay 0r under-rep0rt their earnings has bec0me all ar0und dug in standard
s0ciety. With the pers0nal assessment excepti0n limit fixed at Rs 2.5 lakh per annum, is any0ne
sh0cked that a huge larger part 0f Indians d0n't make g00d 0n pers0nal duty? As it were, just the
individuals wh0 gain 2.5 0ccasi0ns m0re than the public n0rmal pay are qualified t0 c0ver
pers0nal expense. An 0ng0ing rep0rt by the Pe0ple Research 0n India's C0nsumer Ec0n0my
(PRICE), sp0ns0red by studies led by Nati0nal Sample Survey Organizati0n (NSSO), the n0rmal
pay 0f the wealthiest 20% 0f Indians is a simple Rs 95,000. As such, even a huge p 0rti0n 0f
India's m0st pr0sper0us 20% d0n't pay pers0nal duty 0n their yearly pay which is n0t as much as
Rs 2.5 lakh. M0st imp0rtantly Indian is a l0w-pay nati0n, where the annual assessment exclusi0n
edge is set high. In c0ntrast t0 India, 0ther significant creating ec0n0mies set their annual
expense exclusi0n limit at ar0und a large p0rti0n 0f their separate n0rmal public per capita
salaries. India sets it at 2.5 0ccasi0ns 0ver the n0rmal.

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 CURB TAX EVASION IN INDIA

L0wering the thresh0ld t0 say Rs 1 lakh may bring in m 0re pe0ple under the tax net, but it will
n0t necessarily have a significant impact 0n the tax revenue India will earn. This is just the
nature 0f the beast. Thus, it w 0uld be a mistake t0 equate the small number 0f taxpayers with
dish0nesty. With p0litical disc0urse d0minated by c0rrupti0n, black m0ney, and tax evasi0n by
s0me high net w0rth Indians (stashing their m0ney in f0reign bank acc0unts), it has bec0me
easier f0r g0vernment t0 sell measures like dem0netisati0n. Despite the g0vernment’s claims,
dem0netisati0n did little t0 increase the number 0f Indians filing f0r inc0me tax. With the
inc0me tax exempti0n limit fixed at Rs 2.5 lakh per annum, is it any surprise that a significant
maj0rity 0f Indians d0 n0t pay inc0me tax.

SOURCE:https://www.google.com/url?sa=i&url=https%3A%2F%2F2.zoppoz.workers.dev%3A443%2Fhttps%2Fwww.thehindu.com%2Fbusiness%2F Economy
%2Fdirect-tax-base-widens-sharply-over-4-years-compliance-.

At the end 0f the day, just the individuals wh0 earn 2.5 times m0re than the public n0rmal salary
are qualified t0 settle pers0nal assessment. An 0ng0ing rep0rt by the Pe0ple Research 0n India's
C0nsumer Ec0n0my (PRICE), upheld by 0verviews directed by Nati0nal Sample Survey
Organizati0n (NSSO), the n0rmal salary 0f the wealthiest 20% 0f Indians is a simple Rs 95,000.
As it were, even a huge secti0n 0f India's m0st well-t0-d0 20% d0n't pay pers0nal duty 0n their
yearly pay which is n0t as much as Rs 2.5 lakh. Basically Indian is a l 0w-pay nati0n, where the
annual assessment excepti0n edge is set high. In c0ntrast t0 India, 0ther significant creating
ec0n0mies set their pers0nal expense excepti0n limit at r0ughly a large p0rti0n 0f their particular

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 CURB TAX EVASION IN INDIA

n0rmal public per capita salaries. India sets it at 2.5 0ccasi0ns 0ver the n0rmal. Bringing the limit
d0wn t0 state Rs 1 lakh may get m0re individuals under the duty net, h0wever it w0n't really
significantly affect the expense inc0me India will pr0cure. This is 0nly the idea 0f the m0nster.
Hence, it w0uld be a misstep t0 liken the m0dest number 0f citizens with untrustw0rthiness.
With p0litical talk 0verwhelmed by defilement, dark cash, and tax av0idance by s0me high t0tal
assets Indians (reserving their cash in unfamiliar financial balances), it has g 0tten simpler f0r
g0vernment t0 sell estimates like dem0netisati0n. Regardless 0f the administrati0n's cases,
dem0netisati0n did little t0 expand the quantity 0f Indians petiti0ning f0r annual duty. An0ther
likely purp0se behind such l0w pr0fits f0r pers0nal expense is the quantity 0f instruments that
permit residents t0 pr0cure tax-exempt pay. Value c0nnected investment funds plans, public
0pp0rtune reserve plans, representatives f0rtunate st0re, and an entire h0st 0f pr0tecti0n plans
0ffer residents a meth0d 0f gaining pay which is excluded fr0m charge. These instruments are
basic f0r their reserve funds. Subsequently, the attestati0n that a l0w pers0nal assessment base is
0nly d0wn t0 untrustw0rthy practices isn't the finished truth.

SOURCE:https://www.google.com/url?sa=i&url=https%3A%2F%2F2.zoppoz.workers.dev%3A443%2Fhttps%2Fwww.thehindubusinessline.com%2Fopinion%
2Fcolumns%2Faarati-krishnan%2Fthe-curious-case-of-a-narrow-tax-.

CHAPTER 6: METHODS TO CURB TAX EVASION INDIA

6.1. IMPOSING PENATIES AS DONE BY THE UNITED STATES

Penalty usually bec0mes payable when it is disc0vered that an assessee has res0lutely abused any
0f the arrangements 0f the burdening rule. N0 law can be c0mpelling and agreeably executed
except if punishments and arraignments are acc0mm0dated. Under the Inc0me charge Act
additi0nally, certain punishments and arraignment have acc0mm0dated as with0ut such
arrangements there is a threat 0f av0idance 0f assessment.

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 CURB TAX EVASION IN INDIA

As the quantity 0f citizens is expanding, the duty 0rganizati0n has need t0 depend increasingly
m0re 0n deliberate c0nsistence 0f expense law by the assessees and c 0nsequently fitting
c0rrecti0nal and indictment arrangements fr0m a vital supplement t0 this meth0d0l0gy Tax
av0idance punishment is an endeav0r by the administrati0ns t0 check these acts 0f neglect.

Tax av0idance punishments are a meth0d 0f rec0uping charges fr0m individuals. Assessment
fines in certain nati0ns g0 up t0 capital punishment, f0r example, China, The tax av0idance
punishments in U.S.A can be a fine 0f ar0und $1, 00,000 0r p0tentially a jail sentence 0f as l0ng
as five years. Acc0rdingly the tax av0idance pr0p0rti0n t0 GNP ab0ut 38%, there are severe laws
t0 manage th0se individuals wh0 rec0rd a b0gus return 0f their pay charge s0 the citizen will
falter. S0 Tax av0idance punishments can have genuine repercussi0ns and tax av0idance will
diminish, in this manner the legislature f0rces genuine tax av0idance sentence and punishments
0n guilty parties, including jail terms and p 0werful fines. In the 0ther hand if the expense
punishment is frail and n0t severe tax av0idance will increment and g0vernment l0ses a t0n 0f
cash fr0m that as the instance 0f creating nati0ns.

G0vernments can endure anything fr0m their residents yet n0t ext0rti0n. Tax av0idance is a s0rt
0f ext0rti0n 0r undermining the aspect 0f the citizen where the pers0n wr0ngfully a v0ids charge
installment. The legislature f0rces exacting and genuine punishments f0r tax av0idance, when
0rganizati0ns, pe0ple, 0r s0me 0ther legitimate elements deliberately evade their lawful duty that
is tax av0idance and the punishments are extreme, including jail terms and weighty fines. “Any 13
pers0n wh0 willfully attempts in any manner t0 evade 0r defeat any tax imp0sed by this title 0r
the payment there0f shall, in additi0n t0 0ther penalties pr0vided by law, be guilty 0f a fel0ny
and, up0n c0nvicti0n there0f, shall be fined n0t m0re than $100,000 ($500,000 in the case 0f a
c0rp0rati0n), 0r impris0ned n0t m0re than 5 years, 0r b0th, t0gether with the c0sts 0f
pr0secuti0n.” Characteristics secti0n 7201 0f the Internal Revenue states in U.S.A :

1- U.S. law said that any pers0n in any way trying t0 evade tax:- That means any pers0n either a
natural pers0n 0r legal entity, he, she, it all 0f them will subject t0 the law in the case 0f
evade 0r defeat tax imp0sed.

13 Section 7201 of the Internal Revenue Code states in U.S.A.

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 CURB TAX EVASION IN INDIA

2- 2- Any manner t0 evade 0r defeat any tax imp0sed:- Here this text includes the any meth0d
0f tax evasi0n, tax evasi0n has many meth0ds, the sec0nd c0nditi0n is a breach 0f any tax
imp0sed
3- 3- Fix penalty :- Law may specify penalties in case 0f tax evasi0n and the law did n0t
excludes any case.

Penalties 0f tax evasi0n in India:-

The c0de states in India “A pers 0n shall be liable t0 a penalty if he has under rep 0rted the tax
bases f0r any financial year. The penalty shall be a sum, which shall n 0t be less than, but which
shall n0t exceed three times the am0unt 0f tax payable in respect 0f the am0unt 0f tax bases
under rep0rted f0r the financial year”

• Law in India d0es n0t explicitly menti0n any name f0r tax evasi0n 0r tax evade.

• Law in India d0esn‘t menti0n a specify penalties f0r pers0ns 0r f0r c0mpanies but Indian law
menti0n that “but which shall n0t exceed tw0 times the am0unt 0f tax payable in respect 0f
the am0unt 0f tax bases under rep0rted f0r the financial year”14 .

• Indian law d0esn‘t menti0n an impris0nment as penalty.

6.2. OTHER METHODS TO CURB TAX EVASION15:

1. Reducti0n in tax rates: Pred0minance 0f high duty rates is the first and f 0r m0st
explanati0n behind assessment evasi0n, because this is the thing that makes the av0idance s0
pr0ductive and appealing disregarding the chaper0n chances. The current significant level 0f tax
c0llecti0n leaves the G0vernment with little extensi0n f0r m0bility f0r bringing extra assets up in
the midst 0f crisis. The greatest peripheral pace 0f pay charge, including 0vercharge, 0ught t0 be
br0ught d0wn s0 as t0 make an effect, the decrease in the paces 0f tax assessment 0ught t0 be at
0ne str0ke.

2. Minimisati0n 0f c0ntr0ls and licenses: A b0ard 0f trustees 0f specialists 0ught t0 be

named t0 enquire int0 the utility 0f every current c0ntr0l, permitting and license framew0rks,
14 Income tax Act 1961,,section 271(1)(c),p1.888.
15 Jain, A. (1987). Tax Avoidance and Tax Evasion: The Indian Case. Modern Asian Studies, 21(2), 233-255.
Retrieved October 16, 2020, from http://www.jstor.org/stable/312646.

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 CURB TAX EVASION IN INDIA

and rec0mmend end 0f such 0f these similar t0 n0t, at this p0int th0ught ab0ut vital. This
advis0ry gr0up may likewise pr0p0se changes in law and strategies in 0rder t0 guarantee that the
c0ntr0ls which are significant f0r the strength 0f the ec0n0my are directed all the m0re viably
and with minimal pr0v0cati0n t0 the general p0pulati0n.

3. Regulati0n 0f d0nati0ns t0 p0litical parties16: There is a need t0 keep p0litical

establishments liberated fr0m debasement. Evacuati0n 0f the pr0hibiti0n 0n gifts by
0rganizati0ns t0 ide0l0gical gr0ups is, thusly, n0t supp0rted. Sensible awards in-help 0ught t0 be
given by the G0vernment t0 public ide0l0gical gr0ups and reas0nable rules 0ught t0 be advanced
f0r perceiving such gatherings and deciding the degree 0f grantin-help t0 every 0ne 0f them.
Regardless 0f the ch0ice 0f g0vernment 0n the t0pic 0f financing ide0l0gical gr0ups, the
gatherings might be needed t0 get their rec0rds reviewed and distributed every year. The m0st
extreme sum qualified f0r all0wance by virtue 0f gifts t0 ide0l0gical gr0ups 0ught t0 be 10% 0f
the gr0ss all 0ut pay, subject t0 r00f 0f rupees 10,000. The derivati0n t0 be permitted 0ught t0 be
30% 0f the passing measure 0f the gift.

4. Creating C0nfidence am0ng Small taxpayers: The act 0f being t0 fastidi0us in little
cases, where n0 beneficial inc0me is included, has d0ne a l0t t0 harm 0f the divisi0n in the
public eye. The activity f0r fixing the risk lies with the 0ffice. The guidelines gave by the Central
B0ard 0f Direct Taxes 0n the new meth0d f0r making appraisals in little pay cases make a b 0ld
departure fr0m the past and are pr0bably g0ing t0 acc0mplish m0re n0tew0rthy 0utc0mes than
the pri0r little salary c0nspire.

5. All0wance 0f Certain Business Expenses: Diversi0n c0nsumpti0n which is br0ught

ab0ut principally f0r the enc0uragement 0f the citizens business and is straightf0rwardly
identified with its dynamic lead 0ught t0 be permitted t0 be deducted up t0 the r00fs
rec0mmended under area 37 (2A) 0f the Inc0me-charge Act, 1961.

6. Changes in Penal Pr0visi0ns: Punishment fills its need just inasmuch as it is with in the
sensible limit.0nce it cr0sses that limit, it is b0und t0 expand the unbending nature 0f the
citizen's stubb0rnness than t0 change him. A punishment dependent 0n pay rather than charge

16 Solution, I. L. (2019, August 11). An Analysis Of Tax Evasion In India. Indian Legal Solution.
https://indianlegalsolution.com/an-analysis-of-tax-evasion-in-india/

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 CURB TAX EVASION IN INDIA

hits the m0re m0dest citizen all the m0re brutally. The quantum 0f punishment imp0sable f0r
disguise 0f salary 0ught t0 be regarding the duty tried t0 be av0ided, rather than the pay hid.

7. Vig0r0us Pr0secuti0n P0licy: The divisi0n 0ught t0 t0tally re0rient itself t0 a m0re
incredible indictment strategy s0 as t0 ingrain dread and entire s0me regard f0r the expense laws
in the brains 0f the citizens. Further, where there is sensible p 0ssibility 0f making sure ab0ut a
c0nvicti0n, the duty d0dger 0ught t0 c0nstantly be indicted.

8. Intelligence and Investigati0n: T0 adapt t0 the expanding refinement and m0dernity 0f

the pr0cedures 0f tax av0idance, there is a requirement f0r c0mplete re0rientati0n in the
divisi0n's way t0 deal with its techniques f0r kn0wledge as examinati0n. The hardware f0r
kn0wledge and examinati0n at the 0rder 0f the 0ffice 0ught t0 likewise be alt0gether redesignd
and sm00thed 0ut t0 handle sufficiently the threat 0f tax av0idance.

9. Taxati0n 0f agricultural inc0me: Agricultural inc0me, hich is at present external the

f0cal assessment net, 0ffers a l0t 0f degree f0r c0vering dark cash. There is critical requirement
f0r h0rticultural salary being exp0sed t0 a unif0rm expense pretty much c0mparable t0 the duty
0n different earnings in 0rder t0 take 0ut the degree f0r av0idance 0f direct assessments f0rced
by the Uni0n G0vernment.

10. C0mpuls0ry maintenance and audit 0f acc0unts17: A legal arrangement might be

made requiring supp0rt 0f rec0rds by all pe0ple in calling, and by m0ney managers where the
pay fr0m business is in 0verabundance 0f excluded cut0ff 0r turn0ver 0r gr0ss receipts are in
abundance 0f Rs. 50 lakh in any 0f quickly three g0ing bef0re years. An arrangement might be
presented in the law making intr0ducti0n 0f examined acc0unts c0mpuls0ry in all instances 0f
business 0r calling where the deals/turn0ver/receipts surpasses as far as p0ssible.

17 P. (2019, June 8). Sitharaman highlights India’s efforts to counter tax avoidance, evasion. The Economic Times.
https://economictimes.indiatimes.com/news/economy/foreign-trade/sitharaman-highlights-indias-efforts-to-countertax-
avoidance-evasion/articleshow/69701878.cms?from=mdr.

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 CURB TAX EVASION IN INDIA

CHAPTER 7 : CONCLUSION

The researcher found that, tax evasion is crux in our research as well as the main objective. He
discovered that all nations are experiencing tax avoidance created nations and creating regions
also, and it is general marvel, and it happens in all social orders, social classes, all callings, all
ventures, and every monetary framework. We found that all meanings of tax avoidance are not
fixed, however every definition talks from one point, and all definitions zeroed in on tax
avoidance attributes, similar to citizen's conduct is purposeful and conscious, citizen is free
picked and information, citizen follows extortion strategy and tax avoidance as cheating, tax
avoidance is a break of the ethical commitment to comply with the law. After that we thought
about kinds of tax avoidance, there are three sorts of tax avoidance, first kind of tax avoidance is
as per size, it is separated into miniature and large scale tax avoidance, second sort is as indicated
by area, it has characterization into interior and global tax avoidance, third sort is as per courses
of the citizen, it is ordered into charge shirking and tax avoidance.

The researcher examined all insights regarding punishments of tax avoidance, he discovered tax
avoidance punishments in U.S.A and India. There are contrasts between two nations in
punishments of tax avoidance and it turns out to be certain that punishments of tax avoidance in
U.S.A are stricter than punishments of tax avoidance in India. Next we talked about reasons of
tax avoidance and we assembled it to monetary reasons, authoritative reasons, administrative
reasons, and social reasons also. A few reasons are level of duty rate, social brain science of tax
avoidance, complex assessment framework, bungle of income from charges, unjust
dissemination of luxuries, nature of monetary framework, complex of expense law, debasement
in charge organization, underground financial, etc. In the following area we examined tax
avoidance as indicated by sorts of assessments, we discovered that tax avoidance in pay charge
rely on deception. In this point there are two different ways either introducing bogus data or
introducing substantiates realities specifically, unregistered salary also.

Tax avoidance in extract obligations has under-report of creation, undervaluation technique,

misclassification of products, abuse of exclusion. Avoidance of customs obligations is
undervaluation invoicing of imports and miss-affirmation of products, pirating is one sort of tax
avoidance. At last avoidance in esteem included expense. At that point we explored in all
subtleties tax avoidance in organizations and callings because of this zone is target of this

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 CURB TAX EVASION IN INDIA

examination, tax avoidance in business and calling is essence in this investigation, so we clarified
that from all points. we discovered tax avoidance in the bookkeeping records, similar to records
of money exchange just and noncash exchanges are recorded in the control book. For this
situation the preliminary equalization doesn't show all records and blunders, control by the
bookkeeping hypothesized and bookkeeping rule, the substance needs to follow from year to
year. Same when strategies changed from year to year that implies non-consistency in these
arrangements that prompts the distinctions in net benefit and non-presence archives for
supporting of diary sections. Furthermore strategies for tax avoidance in the records, similar to
avoidance in the buy reports, avoidance in the business archives, control in real money deals,
control in real money receipts of non-money deals, avoidance in the use records.

Thirdly tax avoidance in exchange account. Here there are numerous ways for tax avoidance like
increment in costs of procurement, recording one exchange multiple times in the bookkeeping
books, blending of the acquisition of benefits and acquisition of products, control in the exchange
cost of money, higher evaluating of merchandise bought from other action claimed by the citizen,
additionally tax avoidance in deals, similar to no records of same deals, lessen the estimation of
deals in the bookkeeping record, increment in deals of one sort of merchandise, control in deals
archives. Fourthly tax avoidance in benefit and misfortune account, in this subject benefit and
misfortune account incorporates numerous records as consumptions and income.

The tax-GDP rati0 at ab0ut 17 per cent remains the l0west am0ng all maj0r ec0n0mies 0f the
w0rld. It can als0 be seen fr0m the analysis 0f the tax-GDP rati0 that 0ver a peri0d 0f time, the
c0ntributi0n 0f direct taxes in 0verall taxes impr0ved, while that 0f indirect taxes went d0wn and
that 0f the state taxes remained static.Tax av0idance in inc0me side, citizen l00ks f0r ab0ut
m0dest representati0n 0f the truth in inc0me s0 as t0 diminish available pay like inc 0me fr0m
deals, benefits fr0m deals 0f advantages, entrepreneur inc0me, and 0ffer 0f pr0ducts als0. In the
last area we examined impact 0f tax av0idance. We disc0vered there are f0ur 0utc0mes in the
state; they are m0ney related effect, m0netary impact, p0litical results, and s0cial impacts t00.
The Inc0me Tax Department has t0 devel0p n0n-intrusive meth0ds 0f evasi0n detecti0n and t0
launch a big drive against tax evaders and black marketers. It is h 0ped that in due c0urse, the tax-
GDP rati0 0f the c0untry will significantly impr0ve, s0 as t0 enable the g0vernment t0 expand its
s0cial welfare agenda and help in rem0val 0f p0verty and backwardness in the c0untry.

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 CURB TAX EVASION IN INDIA

CHAPTER 8 : BIBLIOGRAPHY

8.1. BOOKS REFERRED

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8.2. RESEARCH ARTICLE REFERRED:

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• Ahluwalia, M. (2002). Economic Reforms in India since 1991: Has Gradualism Worked?
The Journal of Economic Perspectives, 16(3), 67-88. Retrieved October 16, 2020, from
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• RAJAKUMAR, J. (2014). Corporate Response to Direct Tax Reforms. Economic and
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Weekly, 49(51), 67-70. Retrieved October 16, 2020, from

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and India, 1986–2015. American Economic Journal: Applied Economics, 1(2), 53-63.
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8.3. WEB SOURCES REFERRED:

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• P. (2019, June 8). Sitharaman highlights India’s efforts to counter tax avoidance, evasion.
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