TAX AVOIDANCE |
TAX EVASION |
(i) Where the payment of tax is avoided though by complying with the provisions of law but defeating the intension of the law is known as tax Avoidance. |
Where the payment of tax is avoided through illegal means or fraud is termed as tax evasion. |
(ii) Tax Avoidance is undertaken by taking advantage of loop holes in law |
Tax evasion is undertaken by employing unfair means |
(iii) Tax Avoidance is done through not malafied intention but complying the provision of law. |
Tax Evasion is an unlawful way of paying tax and defaulter may punished. |
(iv) Tax Avoidance looks like a tax planning and is done before the tax liability arises. |
Tax evasion is blatant fraud and is done after the tax liability has arisen. |
