Page 83 - DCOM301_INCOME_TAX_LAWS_I

Income Tax Laws – I

Notes as attempts to evade taxes. Moving funds suspiciously and with no clear reason or documentation
can attract the attention of tax authorities. Once tax authorities suspect someone of tax evasion,
they will scrutinize that taxpayer closely.
Notable members of the criminal community, including no less a figure than infamous gangster
Al Capone, have gotten in trouble for tax evasion. Sometimes, it is difficult to pinpoint illegal
activity and prosecute people for activities such as Mob involvement, but those individuals can
be thrown in jail for failing to pay taxes. In the eyes of the Internal Revenue Service, even income
acquired from illegal activities needs to be declared and taxed.

Task List out some of the people who are involved in the Tax Evasion.

Self Assessment

Fill in the blanks:
10. …………………is a perfectly legal approach to handling taxes.
11. ………………………is the levying of tax by two or more jurisdictions on the same declared
income, asset, or financial transaction.
12. With tax………………, people avoid taxes not by scrupulously following the tax code, but
by hiding or moving income, making false claims on a tax return, and utilizing other
illegal means to pay less on their taxes.

3.5 Tax Management

Tax management refers to the compliance with the statutory provisions. While tax planning is
optional, tax management is of law. It includes maintenance of accounts, filling of return, payment
of taxes, deduction of tax at source, timely payment of advance tax, etc. Poor tax management
may lead to levy of interest, penalty, prosecution, etc. In some cases it may lead to heavy
financial loss if proper compliance is not made.

Example: If a loss return is not filed in time it will result in a financial loss because such
loss will not be allowed to be carried forward.
Tax Management includes maintenance of records in prescribed format. It also includes getting
audited the records, filing returns and pay taxes. It is a regular feature of business enterprises
and a form of tax planning. Here employees use CBDT (Central Board of Direct Taxes) and
employers can use TDCAN (Tax Deduction and Collection Account Number).

3.5.1 Main Aims of Tax Management

The main aims of tax management are as follows:
(i) Compliance with legal formalities
(ii) Saving from penalties and prosecution
(iii) Taking advantage of various tax incentives and deductions

(iv) Review of department orders

78 LOVELY PROFESSIONAL UNIVERSITY