Probable Implication Of Tax Evasion
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Probable implication of Tax Evasion

Sales Manager

What is tax evasion?

Simply put, tax evasion occurs when any trust, individual, or firm, seeks to avoid paying taxes by illegal and unfair means, by, for example, deliberately hiding income from the tax authorities to reduce the liability of tax.

People have been known to submit dishonest reports, including declaring less gains, profits, or income than what was actually earned. Other means of evading tax are smuggling, and avoiding paying out customs duty, value added tax, and income tax.

Smuggling involves the export or import foreign goods through unauthorised routes, to avoid paying customs duties, or to bring in contraband. Importers evade paying customs duty by submitting false declarations of the description of the product and the quantity imported.

Producers or retailers that collect VAT from consumers evade paying taxes by showing lowered sales amounts. The double taxation system that includes VAT and service tax has resulted in a lack of clarity with respect to tax-related issues.

What is the direct result of evading tax?

Tax evasion results in the loss of revenue for the government. It generates more and more black money - money that is acquired through illegal means - that people try and offload as quickly as possible, by purchasing real estate, jewellery, gold, automobiles, paintings, expensive clothes and accessories, and so on. This distressed purchasing artificially inflates prices and therefore the market.

The greater the income in the black money circuit, the greater the freedom of external economic transactions, and the greater the leakage into foreign financial institutions and markets. Not only is tax evasion detrimental to the progress of the economy, but also harmful to the individual.

Paying taxes, and on time, means better healthcare and education. The risk-reward for tax evasion is highly unfavourable. It’s better to pay your taxes on time, and sleep well. If you are a salaried employee, then TDS (Tax deducted at Source), helps you to pay your taxes.

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