TAX PLANNING

• Tax Avoidance
• Tax Evasion
• Tax Management
• Tax Planning with reference to
Financial Management Decisions
 Capital Structure
Inter Corporate Dividend and
Transfer
Dividend policy
Bonus Shares
 INTRODUCTION
• The avid goal of every taxpayer is to
minimize his Tax Liability. To achieve this
objective taxpayer may resort to following
Three Methods :
– Tax Planning
– Tax Avoidance
– Tax Evasion
• It is well said that “Taxpayer is not
expected to arrange his affairs in a such
manner to pay maximum tax “ . So, the
Assessee shall arrange the affairs in a
manner to reduce tax.
• But the question what method he opts
for ? Tax Planning, Tax Avoidance, Tax
Evasion !
 Tax Planning
• Tax Planning involves • Investment in securities
provided u/s 10(15) .
planning in order to • Interest on such
avail all exemptions, securities is fully
deductions and rebates exempt from tax.
• Exemptions u/s 10A,
provided in Act. The 10B, and 10BA
Income Tax law • Residential Status of the
itself provides for person
various methods for Tax • Choice of accounting
system
Planning, • Choice of organization.
 Tax Planning
• Short term tax planning.(Saving in tax)
• Long term tax planning.(Shares given to son
or spouse)

• Permissive tax planning.(Different tax

concessions)

• Purposive Tax Planning.(correct selection of

investment)
 Tax Evasion
• When any individual makes false claims
to reduce his total income or by not
providing any information regarding his
total income, then it is called as Tax
Evasion. By doing so, his tax liability is
reduced, and it will result in less tax
being paid by him.
 Tax Evasion
A person reduce his taxable income:-
• By not recording sale made by him,
• Claiming bad debts or losses which never occurred,
• Making personal expenses as business expenses,
• Claiming false donation made under different
sections like u/s 80G,
• By not showing capital gain,
• By not showing income from benami transaction,
• By showing excessive salary paid.
 Tax Avoidance

• Tax avoidance means reducing your tax

liability without breaking any law. In
this an individual looks for loopholes in
the law and makes most of those
loopholes to reduce the tax liability.
• By using Tax Avoidance, you satisfy all
provisions of law but in the same time
you reduce your tax liability too.