Tax evasion
Tax evasion

When a person reduces his total income by making false claims or by withholding the  information regarding his real income, so that his tax liability is reduced,  is known as tax evasion.  Tax evasion is not only illegal but it is immoral, anti-social and anti-national practice.  Therefore,  under the direct tax law provisions have been made for imposition of heavy penalty and institutions of prosecution against tax evaders.

 The tax evader reduces his taxable income by one or more of the following steps:

  1. Unrecorded sales. 
  2. Claiming bogus expenses,  bad debts and losses. 
  3. Charging personal expenses as business expenses. 
  4. Submission of bogus receipt for charitable donations for deduction u/s 80G.
  5. Non-disclosure of capital gains on assets. 
  6. Non-disclosure of income from 'Benami transaction'. 
  7. By showing excessive or bogus salary payment to near relatives. 
  8. By not showing taxable income in return of income. 
 In brief to evade tax he suppresses or omits receipts, inflates expenses and claims bogus deductions.