Page 74 - DCOM508_CORPORATE_TAX_PLANNING

Unit 3: Corporate Tax Planning

(iv) Disclosure of All Government Employees Assets: Disclosure of assets of government Notes
employee every year will somehow restrict them to indulge them in illegal activities & pay
taxes on all income earned rightfully. This will also leads to overcome the loss of country
resources and force other to do work completely and legally.
(v) Transparency in Government Expenditure: There should be transparency on government
expenditure at every level to make sure the every rupee sent by government is reached
at grass root level. This will avoid the vaporisation of a large chunk of money done by

higher-class official, politician, bureaucrats, contractors, etc. All offices of government

should be brought under the audit of Comptroller and Auditor General of India (CAG).
Bringing expenditures of ministry of defiance was one of the major such developments.

(vi) Issue of Special Bonds by the Government: Special bonds may be issued by the government
asking the black money hoarders to invest in them by providing them immunity from
criminal proceeding existing under the existing law.
(vii) Bringing Strong Corruption Laws: Corruption is the root cause of tax evasion; if corruption
is reducing it will considerable reduce the tax evasion. And for reducing corruption and
effective strong law like LOKPAL is needed, which can have the power to investigate
every government employee & framing the maximum time for every case to make the fi nal
judgments unlike present which take years and still cannot punish them.

(viii) Ban & Surveillance on Illegal Trade and Practices: Trades like smuggling of commodities,

drugs, baiting on cricket & various other activities like election polls, flesh trade are one of
the major causes of tax evasion as this activities are illegal they are not viable to pay taxes
on this and thus they evade taxes. Surveillance on these activities will reduce tax evasion &
crime as well.

Self Assessment

State whether the following statements are true or false:

7. Tax evasion is not considered a crime.
8. It is not possible to understand the true impact of taxation without recognising the existence
of evasion.

9. Government earning is depends upon the tax revenue.

3.4 Tax Avoidance

Tax avoidance is the legal utilisation of the tax regime to one’s own advantage, in order to reduce
the amount of tax that is payable by means that are within the law. Tax avoidance is a strategy
which involves exploiting legal means of reducing taxes with the goal of minimising tax liability.
Avoidance is a perfectly legal approach to handling taxes, although sometimes avoidance
practices can stray into the realm of being abusive, at which point people may cross the line into
tax evasion. In tax evasion, people utilise illegal means to avoid paying all or part of their taxes;

evasion can result in prosecution and fines or prison time.
Most taxpayers engage in a certain amount of tax avoidance, because people want to avoid paying
more taxes than they need to. In a simple example, most people claim all of the exemptions
available to them. Likewise, people may take advantage of retirement accounts which offer tax
savings if they plan on saving money for retirement; as long as one is putting money aside,
one might as well reduce taxes at the same time. These tax avoidance strategies are usually
encouraged by financial planners and accountants.

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